Contracting and Employed with Same Company

Epi — Wed, 27 Oct 2021 19:10:31 GMT

Hello,

If someone is currently contracted with an organization and becomes an employee while continuing to offer contract services with the same company, how different would the services for each position need to be? Specifically, if someone was providing healthcare/epidemiologist services as both a contractor and an employee with the same company funded under different grants and working with different patients would that raise any red flags with the IRS about misclassification or constitute a conflict of interest?

Thank you!

Re: Contracting and Employed with Same Company

KochuK — Wed, 27 Oct 2021 20:43:49 GMT

Hi Epi,

IRS determines the workers classification based on three categories collectively.

Quote

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship and consider the extent of the right to direct and control the worker. Finally, document each of the factors used in coming up with the determination.

Unquote

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

It is uncommon that one person can be an independent contractor and an employee with the same company (same name, same Federal ID, EIN).

The company's revenue sources (different grants) and customers (different patients) have no bearing on worker's classification.

Hope this helps. Thank you.

topic Re: Contracting and Employed with Same Company in Self employed

Contracting and Employed with Same Company

Re: Contracting and Employed with Same Company