Tax Issues

Common Law > See Federal Law – Common Law [Federal Independent Contractors & Employees]

Workers’ Compensation

Employers must provide employees with workers’ compensation for injuries or death, but workers’ compensation is generally not required for independent contractors. Statutes generally define who employees are, however, when it is unclear the Workers’ Compensation Board may make a determination based on the relationship. The Board may use the federal common law test that the IRS uses, see Federal Law – Common Law [Federal Independent Contractors & Employees], but the Board also uses the “relative nature of work test”. The relative nature of work test weighs the character of the work, the continuity of the work, the importance of the work, and if the worker should carry his or her own insurance. It is possible for a worker to be classified as an employee for workers’ compensation purposes but not for IRS purposes, and vice versa.
There are statutory exceptions to covering employees for workers’ compensation. Some examples are amateur athletes for non-profits, babysitters, domestic servants employed less than 40 hours a week, farm workers, insurance and real estate agents, and casual yard or household workers.

Non-Tax Issues

Unemployment Insurance

> See Federal Law – Unemployment Insurance [Federal Independent Contractors & Employees] The New York State Department of Labor generally uses the common law factors to determine worker status. See Federal Law – Common Law [Federal Independent Contractors & Employees].

Fair Labor Standards Act (FLSA)

The New York State Department of Labor enforces federal FLSA standards by conducting audits, which are usually commenced due to workers’ complaints.The FLSA provides minimum wage and overtime protections for employees.
The factors to determine if a worker is an independent contractor or an employee are discussed under Federal Law – FLSA [Federal Independent Contractors & Employees].

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