Answer 7 quick questions before you onboard a new worker. We'll tell you whether they're leaning W‑2 employee or 1099 contractor — and how confident you should be.
Who decides how the work gets done — you, or them?
Do you dictate exactly when, where, and how the work is done?
Think schedules, required tools, step-by-step methods. The more you control the "how," the more this looks like employment.
Do you provide periodic or ongoing training on company-specific methods?
Contractors are hired for expertise they already have. Employees are trained into your way of doing things.
Who carries the financial risk and investment?
Does the worker have a significant financial investment in their own tools or equipment?
A contractor usually owns their laptop, software, or equipment. An employee typically uses yours.
Are the worker's business expenses fully reimbursed by your company?
Full reimbursement of day-to-day expenses is a classic employee perk — contractors typically absorb their own costs.
Does the worker market their services to the public or other clients?
A real contractor has — or is building — a roster of other clients. If you're their only source of income, that's a flag.
How permanent — and how central — is this role?
Is the work performed a core, essential part of your daily business operations?
If the role is woven into the everyday running of your business (not a defined, separate project), it starts to look like employment.
Is the relationship ongoing and indefinite, or tied to a specific end date?
Indefinite, open-ended relationships read as employment. A scoped engagement with a clear finish line reads as contract work.
Answer each question above and your result will sharpen as you go.
Book Your Free 15-Minute Classification Review →This 7-question check mirrors the IRS's core test, but the full common-law standard runs to 11 factors — including profit-or-loss opportunity, method of payment, and benefits eligibility, the details that hold up under a DOL audit. Our Full Worker Classification Audit walks through every factor with you and delivers a written risk memo you can keep on file.
View Full Audit Pricing →Disclaimer: This checklist is for informational purposes and does not constitute legal advice. For state-specific wage and hour compliance, consult a certified HR professional or employment attorney.