Print This Page

Employee or Independent Contractor?

Submitted by Lisa Marsh, Director of Unemployment Insurance Tax & Wage Operations, Employment Security Department

It is often difficult to determine whether a worker is an employee or an independent contractor. The Employment Security Department applies an easy test that applies to all businesses. A person is an independent contractor if he or she passes one of the following tests.

Test one
You are an independent contractor if all three of the following criteria are true:

1. You are completely free from all direction and control by the employer. This means that you furnish your own materials and equipment, schedule your own hours and breaks, and/or perform work for other employers at the same time.
2. The services you perform are different from those usually offered by the business that is contracting for services OR your services are not performed at the business’ physical location.
3. You are independently established in your own trade, occupation or business. That means you have a valid business license, you advertise independently, you have other customers and/or you operate your own office or place of business.

Test two
If you fail the first test, then you must meet all six of the following criteria to be considered an independent contractor.

1. You are completely free from all direction and control by the employer;
2. Your services are outside of the usual course of business or are performed off-site OR you must cover the costs of the site where the service is performed;
3. You are independently established in your own trade, occupation or business OR your principal place of business is eligible for a federal income-tax deduction;
4. Your must file a schedule of expenses for the service to the Internal Revenue Service;
5. You have a Unified Business Identifier (UBI) number and are registered to pay business taxes to the state of Washington; and
6. You maintain a set of bookkeeping records separate from the employer.

If you are unsure whether you or your workers qualify as independent contractors, contact your nearest Employment Security Department tax office. Locations are posted online at www.dto.go2ui.com.

<< Back to Newsletter Home