Difference Between Employee And Subcontractor

By Robert Robillard on Contractor Advice

Difference Between Employee And Subcontractor


Employee or Sub-Contractor?

According to the IRS three categories help determine if someone is an employee or a sub-contractor.

The IRS looks at the level of control exercised over a worker in the following three categories.

1. Behavioral control:

Instructions that the business gives to the worker, such as; What tools or equipment to use.

  • What workers to hire or to assist with the work.
  • Where to purchase supplies and services.
  • What work must be performed by a specified individual.
  • What order or sequence to follow.
  • Training that the business gives to the worker.

2. Financial control:

  • The extent to which the worker has un-reimbursed business expenses. Independent contractors are more likely to have un-reimbursed expenses than are employees.
  • How the company pays the worker. An employee is generally guaranteed a regular wage amount for an hourly, weekly.
  • An independent contractor is usually paid by a flat fee for the job.
  • The extent to which the worker can realize a profit or loss.

3. The relationship between the parties.

  • Whether or not the company provides the worker with employee-type benefits.
  • If the worker has the expectation that the relationship will continue indefinitely, rather than for a specific project or period.
  • If a worker provides services that are a key aspect of your regular business activity.
  • When looking at these categories they consider the the amount of instruction needed varies among different jobs,
  • The more a company directs a person in these three categories the more likely they will be considered an employee.

A sub-contractor should be doing the following:

  • Advertise their own services [business cards, website, job signs, truck lettering, etc]
  • Have and use their own tools.
  • Performs work for numerous other businesses.


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About the author

Robert Robillard

Carpenter / Remodeler / Editor

Rob Robillard is “The Concord Carpenter” Rob is a builder, general contractor, carpenter, woodworker, and editor of Concord Carpenter and ToolBoxBuzz As a General Contractor and carpenter, Rob owns and operates Concord Carpenter LLC. A full-service remodeling and construction company. Rob is a recognized leader in home building best practices and a source for how-to information for building professionals. On this website, Rob covers all aspects of home construction, building science, home improvement, woodworking, remodeling, and some of the best product and tool reviews. Rob is in charge of our Tool and Product Review series - Concord Carpenter Videos where we post all of our tool reviews and video tutorials. Rob approaches remodeling and building construction with a pragmatic and problem-solving approach. He enjoys using his knowledge and experience to help and educate building professionals as well as DIYers on best practices in the construction and remodeling industry. He's a strong advocate for "raising the bar" in the construction trades and promoting the trades to youth. #BeAMentor #Green2Great Craftsmanship, quality, and pride guide his journey on this channel The Concord Carpenter's motto: "Well done is better than well said!" : Read more about Rob

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