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The 20 Questions
The 20 Questions are a very old and very subjective common-law test to determine
independent contractor vs. employee status. Many of them no longer make sense in modern times, especially in the context of technical service industries, but for the most part they are still used by the IRS (even though they have been rearranged slightly). Fortunately, it is not required to pass all of the 20 questions; the answers must be viewed as a whole to give a feel for how much control one party has over the other vs. how independent they are.
These questions are listed and analyzed extensively in
the ICCA's book on these issues. Also
here is a brief summary.
The most important thing to remember is that reclassification is usually the client's or broker's fault, not the contractor's fault, contrary to what brokers may say. The client and broker both must avoid treating the contractor as their own employee; otherwise they're asking for some of what Microsoft had to go through. We'll add more info here later on how to handle this properly. For now, here is a draft of a sample contract supplement that could be used to help with this situation. It is intended for informational purposes only and not to be used verbatim in actual contracts, since it has not been reviewed by a lawyer.
As an example of the other extreme, the dreaded, infamous "NACCB Standard Contract" is so one-sided that it would most likely greatly increase the risks of reclassification, even though it's promoted to NACCB members as decreasing those risks.
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This page was last updated Friday, 05-Mar-2010 03:59:24 SGT