§ 22-2-15-3 — Use of Internal Revenue Code definitions; use of Internal Revenue Service factors

In developing the guidelines and procedures
under this chapter, the department shall use:
(1) the definition of "employee" used in Section 3401(c) of the
Internal Revenue Code; and
(2) the following factors used by the Internal Revenue Service to
determine whether a worker is an independent contractor:
(A) Instructions. A worker who is required to comply with other
persons' instructions about when, where, and how he or she is
to work is ordinarily an employee. This control factor is present
if the person or persons for whom the services are performed
have the right to require compliance with instructions. See, for
example, Rev. Rul. 68-598, 1968-2 C.B. 464, and Rev. Rul.
66-381, 1966-2 C.B. 449.
(B) Training. Training a worker by requiring an experienced
employee to work with the worker, by corresponding with the
worker, by requiring the worker to attend meetings, or by using
other methods, indicates that the person or persons for whom
the services are performed want the services performed in a
particular method or manner. See Rev. Rul. 70-630, 1970-2
C.B. 229.
(C) Integration. Integration of the worker's services into the
business operations generally shows that the worker is subject
to direction and control. When the success or continuation of a
business depends to an appreciable degree upon the
performance of certain services, the workers who perform those
services must necessarily be subject to a certain amount of
control by the owner of the business. See United States v. Silk,
331 U.S. 704 (1947), 1947-2 C.B. 167.
(D) Services rendered personally. If the services must be
rendered personally, presumably the person or persons for
whom the services are performed are interested in the methods
used to accomplish the work as well as in the results. See Rev.
Rul. 55-695, 1955-2 C.B. 410.
(E) Hiring, supervising, and paying assistants. If the person or
persons for whom the services are performed hire, supervise,
and pay assistants, that factor generally shows control over the
workers on the job. However, if one (1) worker hires,
supervises, and pays the other assistants under a contract under
which the worker agrees to provide materials and labor and
under which the worker is responsible only for the attainment
of a result, this factor indicates an independent contractor
status. Compare Rev. Rul. 63-115, 1963-1 C.B. 178, with Rev.
Rul. 55-593 1955-2 C.B. 610.
(F) Continuing relationship. A continuing relationship between
the worker and the person or persons for whom the services are
performed indicates that an employer-employee relationship
exists. A continuing relationship may exist where work is
performed at frequently recurring although irregular intervals.
See United States v. Silk.
(G) Set hours of work. The establishment of set hours of work
by the person or persons for whom the services are performed
is a factor indicating control. See Rev. Rul. 73-591, 1973-2
C.B. 337.
(H) Full time required. If the worker must devote substantially
full time to the business of the person or persons for whom the
services are performed, such person or persons have control
over the amount of time the worker spends working and
impliedly restrict the worker from doing other gainful work. An
independent contractor on the other hand, is free to work when
and for whom he or she chooses. See Rev. Rul. 56-694, 1956-2
C.B. 694.
(I) Doing work on employer's premises. If the work is
performed on the premises of the person or persons for whom
the services are performed, that factor suggests control over the
worker, especially if the work could be done elsewhere. Rev.
Rul. 56-660, 1956-2 C.B. 693. Work done off the premises of
the person or persons receiving the services, such as at the
office of the worker, indicates some freedom from control.
However, this fact by itself does not mean that the worker is not
an employee. The importance of this factor depends on the
nature of the service involved and the extent to which an
employer generally would require that employees perform such
services on the employer's premises. Control over the place of
work is indicated when the person or persons for whom the
services are performed have the right to compel the worker to
travel a designated route, to canvass a territory within a certain
time, or to work at specific places as required. See Rev. Rul.
56-694.
(J) Order of sequence set. If a worker must perform services in
the order or sequence set by the person or persons for whom the
services are performed, that factor shows that the worker is not
free to follow the worker's own pattern of work but must follow
the established routines and schedules of the person or persons
for whom the services are performed. Often, because of the
nature of an occupation, the person or persons for whom the
services are performed do not set the order of the services or set
the order infrequently. It is sufficient to show control, however,
if such person or persons retain the right to do so. See Rev. Rul.
56-694.
(K) Oral or written reports. A requirement that the worker
submit regular or written reports to the person or persons for
whom the services are performed indicates a degree of control.
See Rev. Rul. 70-309, 1970-1 C.B. 199, and Rev. Rul. 68-248,
1968-1 C.B. 431.
(L) Payment by hour, week, month. Payment by the hour, week,
or month generally points to an employer-employee
relationship, if this method of payment is not just a convenient
way of paying a lump sum agreed upon as the cost of a job.
Payment made by the job or on a straight commission generally
indicates that the worker is an independent contractor. See Rev.
Rul. 74-389, 1974-2 C.B. 330.
(M) Payment of business and traveling expenses. If the person
or persons for whom the services are performed ordinarily pay
the worker's business or traveling expenses or business and
traveling expenses, the worker is ordinarily an employee. An
employer, to be able to control expenses, generally retains the
right to regulate and direct the worker's business activities. See
Rev. Rul. 55-144, 1955-1 C.B. 483.
(N) Furnishing of tools and materials. The fact that the person
or persons for whom the services are performed furnish
significant tools, materials, and other equipment tends to show
the existence of an employer-employee relationship. See Rev.
Rul. 71-524, 1971-2 C.B. 346.
(O) Significant investment. If the worker invests in facilities
that are used by the worker in performing services and are not
typically maintained by employees (such as the maintenance of
an office rented at fair value from an unrelated party), that
factor tends to indicate that the worker is an independent
contractor. On the other hand, lack of investment in facilities
indicates dependence on the person or persons for whom the
services are performed for such facilities and, accordingly, the
existence of an employer-employee relationship. See Rev. Rul.
71-524. Special scrutiny is required with respect to certain
types of facilities, such as home offices.
(P) Realization of profit or loss. A worker who can realize a
profit or suffer a loss as a result of the worker's services (in
addition to the profit or loss ordinarily realized by employees)
is generally an independent contractor, but the worker who
cannot is an employee. See Rev. Rul. 70-309. For example, if
the worker is subject to a real risk of economic loss due to
significant investments or a bona fide liability for expenses,
such as salary payments to unrelated employees, that factor
indicates that the worker is an independent contractor. The risk
that a worker will not receive payment for his or her services,
however, is common to both independent contractors and
employees and thus does not constitute a sufficient economic
risk to support treatment as an independent contractor.
(Q) Working for more than one (1) firm at a time. If a worker
performs more than de minimis services for a multiple of
unrelated persons or firms at the same time, that factor
generally indicates that the worker is an independent contractor.
See Rev. Rul. 70-572, 1970-2 C.B. 221. However, a worker
who performs services for more than one (1) person may be an
employee of each of the persons, especially where such persons
are part of the same service arrangement.
(R) Making service available to general public. The fact that a
worker makes his or her services available to the general public
on a regular and consistent basis indicates an independent
contractor relationship. See Rev. Rul. 56-660.
(S) Right to discharge. The right to discharge a worker is a
factor indicating that the worker is an employee and the person
possessing the right is an employer. An employer exercises
control through the threat of dismissal, which causes the worker
to obey the employer's instructions. An independent contractor,
on the other hand, cannot be fired so long as the independent
contractor produces a result that meets the contract
specifications. Rev. Rul. 75-41, 1975-1 C.B. 323.
(T) Right to terminate. If the worker has the right to end his or
her relationship with the person for whom the services are
performed at any time he or she wishes without incurring
liability, that factor indicates an employer-employee
relationship. See Rev. Rul. 70-309.
(U) Any other guidelines under IC 22-3-6-1(b) and IC 22-3-7-9(b)(5).

Legislative History

As added by P.L.110-2010, SEC.22.