Employee or Contractor

Federal labor laws consider many criteria in deciding whether a worker is an independent contractor or an employee. The relevant criteria fall into three main categories:

1. Behavioral Control
2. Financial Control
3. Relationship of the Parties

In each case, it is important to consider all the criteria and facts. No single criterion provides the answer. In making a decision, the following explanations and questions should be carefully considered.

Behavioral criteria demonstrate whether there is a right to direct or control how the worker performs. A worker is an employee when BYU-Idaho has the right to direct and control the worker. BYU-Idaho may not have to actually direct or control the way the work is done, as long as BYU-Idaho has the right to direct and control the work.

• Instructions: If the individual receives extensive instruction on how the work is to be done, this suggests that the individual is an employee. Instructions can cover a wide range of topics, for example:
  
  • How, when, or where the work is to be done
  • What tools or equipment is to be used
  • What assistants to hire
  • Where to purchase supplies and services
  • If the individual receives less extensive instructions about what should be done, but not how it should be done, they may be an independent contractor.
• Training: If BYU-Idaho provides the individual with training on required procedures and methods, this indicates that BYU-Idaho wants the work done in a certain way and suggests that the individual may be an employee.

Financial criteria show whether there is a right to direct or control the business aspect of the work.

• Significant Investment: If the individual has a significant investment in the work, they may be an independent contractor. While there is no designated dollar test, the investment must have substance. However, a significant investment is not necessary to be an independent contractor.
• Expenses: If the individual is not reimbursed for some or all of the business expenses incurred, they may be an independent contractor, especially if unreimbursed business expenses are significant in relation to the total cost.
• Opportunity for Profit or Loss: The fact that an individual may have the potential to realize a profit or incur a loss suggests that they are in business for themselves and may be an independent contractor.

These criteria illustrate how the University and the worker perceive their relationship.

• Employee Benefits: The receipt of benefits by the individual, such as insurance, pension, or paid leave, indicates an employer/employee relationship. If the individual does not receive benefits, they could be either an employee or an independent contractor.