The relationship between you and your workers determines whether your workers are employees. An employment relationship exists when a worker performs services for you that are subject to your control, or right to control, whether or not you actually exercise the control.
Generally, an employment relationship exists when the services performed are a regular part of your business. It is presumed that, in order to protect your business interests, you have the right to control the manner in which workers perform services for you.
The services may be performed on a full-time, part-time, temporary, seasonal, or probationary basis. They may be performed on or off your premises or in employees' own homes. Corporate officers, including officers of closely held corporations, are employees of the corporation whether or not they receive wages.
In contrast, "independent contractors" are customarily engaged in an independent trade, occupation, profession, or business. They usually advertise their services, are in a position to realize profit or suffer a loss as a result of their services, and usually have a significant investment in the business. Individuals, who have been found not to be employees for federal unemployment tax purposes by the IRS will not be considered employees for state unemployment taxes for the periods determined in the IRS writing.
If you have any questions about whether your workers are employees, please contact any of the Tax Audit Offices listed in our Field Office Directory.