Employee vs. Contractor: How to Tell the Difference and Why It’s Important


March 11, 2020


Jason Dinesen

  1:00 PM ET | 12:00 PM CT | 10:00 AM PT | 60 Minutes

* Not able to attend the live session? We can arrange an on-demand session for You. Please call 1-951-801-2324

This program has been approved for 1.0 PDCs toward SHRM certification hours.
The program is pre-approved for 1 credit hour under HRCI


An employee typically works on-site at your business or with a designated schedule at another location, works set hours, and is compensated through your payroll system, which deducts contributions for Social Security, Medicare, unemployment, and employee benefits.

It’s important to understand how the IRS and state tax authorities define employee vs. independent contractor status. Otherwise, your company could be at risk of paying unexpected taxes and penalties. It could also face legal liabilities if a regulatory agency rules that a contractor at your business actually qualifies as an employee.

At the conclusion of the webinar, participants will be able to explain the difference between a contractor and an employee, and why it is important to know the difference. We will discuss what happens if the IRS re-classifies a contractor as an employee, and the possible relief available (called “Section 530” relief). We will also discuss the new Form 1099-NEC for reporting contract-labor pay.

Learning Objectives:

  • Discuss the three factors the IRS looks at in determining if someone is a contractor or an employee
  • Discuss the 20-point “common law” test for determining contractor vs. employee
  • Discuss the reporting implications of employee vs. contractor, such as 1099 vs. W-2, payroll taxes, etc.
  • Discuss what happens if the IRS re-classifies contractors as employees
  • Relief under Section 530 for IRS reclassification
  • Factors to consider to determine the difference between an employee and a contractor
  • How to avoid employee misclassification
  • Which to choose: Employee or contractor?
  • What are the tax implications of hiring an employee vs. contractor?
  • What are the insurance implications of hiring an employee vs. contractor?

Who Should Attend:

  • Business owners
  • Controllers
  • CFOs
  • Office managers
  • Payroll professionals
  • Accountants