Employee Contract Vs. Independent Contractor Agreement

HR Specialists often have to determine whether a worker is an employee or an independent contract. The company can incur hefty fines from intentionally misclassifying a worker. Most of the time, distinguishing between an employee and independent contractor is clear; however, sometimes it is not so cut and dry. The Internal Revenue Service (IRS) suggests reviewing three key criteria: Behavior Control, Financial Control, and the Relationship between the worker and the employer.

Behavior Control

Behavior control refers to the degree to which the employer can dictate when and where the worker performs a job. If the employer requires that the worker is in their office from 9 am – 5 pm, then the worker would probably be classified as an employee. An independent contractor would generally work on his or her own hours and would work offsite. Another factor to look for is whether the employer is micromanaging the jobs or if the job is submitted for scheduled reviews. Finally, an independent contractor should not require extra on-the-job training provided by the employer.

Financial Control

Financial control refers to the degree to which the employer provides equipment and assets in order to do the job. In an independent contractor relationship, the employer is not likely to provide equipment such as computers, machinery, software, etc. The employer is also not likely to reimburse expenses related to doing the work. You can also evaluate whether the worker is paid at a wage or a flat fee. Employees are typically paid on an hourly or salaried basis. Independent contractors are usually paid a flat price per job.


The relationship between the employer and the worker is the third criteria to evaluate. If the employer provides benefits to the worker, then the worker is probably an employee. Benefits are rarely offered to independent contractors. The relationship between the employer and the worker is ultimately vindicated with a contract. If you have determined that the worker is, in fact, an independent contractor, then you can fill out this Independent Contractor Agreement Template.

Common Jobs for Independent Contractor Agreement in Digital Business

  • Website Development
  • Graphic Design
  • Digital Marketing
  • Writing & Translation
  • Video & Animation
  • Programming
  • Virtual Assistant