The right-to-control test
Under the IRS common-law rules in Publication 15-A (2026), section 1, anyone who performs services is generally an employee if the business has the right to control what will be done and how it will be done.
A worker is an independent contractor when the business controls only the result, not the means and methods. A deadline or a price concerns the result, not how the work is done.
Three categories of evidence
Publication 15-A groups the facts into three categories:
- Behavioral control: instructions and training, such as training a worker in required installation methods.
- Financial control: unreimbursed business expenses, the worker's investment, how the worker is paid (regular wage or flat fee), and the opportunity for profit or loss. A significant investment in tools and a chance of profit or loss is financial control evidence.
- Type of relationship: written contracts, benefits, and permanency. A relationship expected to continue indefinitely points to employment.
The label does not decide
A framing contractor signs an agreement calling a carpenter an "independent contractor," but sets the carpenter's daily hours, dictates the framing methods, pays a regular hourly wage, and expects to keep the carpenter indefinitely. The carpenter is an employee:
- Hours and methods are behavioral control.
- A regular wage is financial control evidence.
- Indefinite permanency points to employment.
Deciding by what the contract calls the worker is the listed common error. Treating an open-ended relationship as a contractor arrangement reverses the permanency factor. The common-law test has no weekly hours threshold.
Unused control still counts
What matters is the right to control, whether or not the business uses it. A general contractor that may direct how a tile setter works, but never does because the setter is experienced, still has that right, and the fact still points to employee status. Financial control is not the only deciding category, and a written contract is only one type-of-relationship factor that does not override the right to control.