How can I determine if an individual is an employee or an independent contractor?
The Illinois courts have articulated the factors to be considered in determining whether a worker is an employee for purposes of the Workers’ Compensation Act. These include the right to control the work performed, whether the employer controls the work schedule, and whether the worker is paid hourly, whether the employer withholds taxes, whether the employer has the right to discharge the worker and whether the employer supplies materials and equipment. No one factor is determinative. The determination rests on the facts of each case and the totality of the circumstances.
There is a strong incentive to classify workers as independent contractors because it relieves the employer of the obligation to pay social security taxes, unemployment taxes and workers’ compensation insurance. However, most employers do not get this right and it can cost them dearly when they get it wrong.