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Employee or contractor?

This walks you through what the federal test and Rhode Island's own test actually look at, one plain question at a time, and shows you where your answers sit against each of them. It will not tell you which one your worker is. That is a determination, and a determination is not something a web page can make.

Two tests, and they ask different things

Classification is not a preference, and it is not something you and the person agree between you. It is a conclusion about what the working relationship actually is. The paperwork records that conclusion; it does not create it.

The federal test weighs the whole relationship across three kinds of evidence — who directs the work, who carries its economics, and what the relationship itself looks like. No single factor settles it and there is no score that decides it.

Rhode Island applies its own test to unemployment insurance and workers' compensation, and it is harder to satisfy because it starts from the other end. The worker is presumed to be an employee unless the employer can demonstrate all three of its parts. All three, not two.

This page asks both sets of questions about one real person you pay. Answer them as things actually are on a Tuesday, not as the contract describes them.

What this will not do

It will not tell you your answer, and nothing on it should be read as telling you your answer. Not a verdict, not a likelihood, not a percentage. What you get at the end is a description of what you typed, set against what each test looks at.

Rhode Island treats getting this wrong more seriously than almost any other state. That severity is the reason this page refuses to rule, rather than a reason to rule carefully — the consequence of being wrong lands on you, and a form is the wrong thing to have relied on.

What a walkthrough is genuinely good for is arriving at the conversation already knowing which questions matter and roughly where you stand on each of them. That is worth a lot, and it is a different thing from an answer.

The stakes are the reason this page will not rule.

Nothing you type here is sent anywhere

Every answer stays in your browser, on this device. There is no account, nothing is stored, and nothing is transmitted — the page has no way to send it. You are describing somebody you pay, which is exactly the kind of detail that should not be quietly collected, so it is not.

At the end there is a link that carries a short summary — the counts and the leanings, no names and no contact details — into the guided intake, if you want the office to see it. You choose whether to follow it, and you can read the summary first.

The walkthrough

Thirteen questions about one person you pay. Answer them as things actually are, not as the contract describes them — the tests look at what happens, not at what was signed. You can leave any of them blank; what you have answered is collected at the bottom either way.

Behavioural control

Does the business direct how the work is done, rather than only what the result should be — the method, the tools, the hours, the order things happen in.

Who decides how the work gets done?The method, the sequence, which way round the job is tackled.
Who sets the hours, and where the work happens?
Do you train them, or give them your procedures to follow?

Financial control

Does the business control the economics of the job — how they are paid, whose equipment is involved, whether they can work for others, and whether they can lose money.

Whose tools, equipment and materials get used?
Do they work for other businesses as well as yours?
How is the money agreed?
Can they lose money on the work?Absorb an overrun, redo something at their own cost, or come out behind on a job.

The relationship itself

Is there a written agreement and does it describe what is actually happening, is the work a core part of what the business does, and does the arrangement finish or run on.

Is the work they do part of what your business sells?
Does the arrangement have an end?
Do they receive anything an employee of yours receives?Paid time off, a vehicle, a phone, a place in the holiday shutdown, a seat at the company table.

Rhode Island's own test

For unemployment insurance and workers' compensation, Rhode Island applies its own test. It starts from the presumption that the worker is an employee, and asks the employer to demonstrate all three of the following. All three, not two.

A. Is the worker free from your control and direction in performing the work?In fact, and not only on paper. What happens if they do it their own way?
B. Is the work performed outside the usual course of your business, or away from all of your places of business?This is the one most businesses come unstuck on. A construction company using subcontractors for carpentry cannot easily argue that carpentry falls outside the usual course of its business.
C. Is the worker customarily engaged in an independently established trade or business of the same nature as this work?Their own business, doing this kind of work, that existed before you and carries on without you.

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Where your answers sit

Answer the questions above and what you have said is collected here.

What getting it wrong sets off

If the IRS or the state concludes that people you treated as contractors were employees, what is owed is not a fine with a single number on it. It is a stack of things that should have happened, reconstructed: the tax that should have been withheld, your matching share of Social Security and Medicare, unemployment at both levels, interest running on each amount from the date it should have been paid, penalties on top, and on the state side a separate assessment for not carrying workers' compensation for people who turn out to have been employees.

Rhode Island is not passive about it. It runs an active misclassification unit, audits by industry — construction, food service and transportation especially — and treats the underlying conduct considerably more seriously than most states do, up to and including criminally in the construction trades.

The sequence is the whole advantage

Working through these questions before somebody is set up takes a conversation. Working through them after an audit takes everything described above, plus whatever it costs to unwind two years of records.

Where a relationship is genuinely ambiguous — and some are — a written agreement helps only to the extent that it describes what actually happens rather than what you would prefer to be true. The agreement is evidence. It is not the decision.

So the useful moment is before the first payment. What does this person do, who controls how and when they do it, and whose tools and whose customers are involved. If you have just answered thirteen questions and you are less certain than when you started, that is not a failure of the tool. That is the honest state of the thing, and it is the point at which it is worth having somebody look at it properly.

Also asked

Is my worker an employee or a contractor?

No single factor decides it. Someone who shows up every day, uses your equipment, follows your procedures and works only for you is very likely an employee, whatever the contract says. Rhode Island audits this actively, so it is worth getting right before anyone asks.

W-2 or 1099 for this person?

The form does not decide it. What the person does, who controls how and when they do it, and whose tools and customers are involved decide it; the paperwork only records the conclusion. It is a question to ask before someone is set up, not at year end when the forms are being cut.

How serious is getting classification wrong in Rhode Island?

More serious here than in most states. Rhode Island treats wage theft as a felony and made misclassification in the construction trades criminally prosecutable, and that sits on top of the back taxes and civil penalties that come with it anyway. If crews are being run on 1099s, it is worth having someone look at it properly before someone else does. Call (401) 405-8407.

Do I need workers' compensation?

Rhode Island requires employers to carry workers' compensation, with narrow exceptions, and it is also the first document a general contractor asks a subcontractor for before letting anyone on site. Whether your particular setup falls inside an exception is worth confirming rather than assuming, and the certificate is worth having before the work starts, not after.

Before somebody is set up, not at year end.

The office answers within one business day.

Call (401) 405-8407Talk it through

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