Just because a business owner calls a worker an “independent contractor” (or a 1099 worker) does not make them one! Misclassifying workers is a common mistake and can be costly.

Why does this matter? Employees work for a business owner and they have legal protections for minimum wages, overtime pay, etc. Independent contractors, on the other hand, are in business for themselves and have no such protections.

In March 2024, the U.S. Department of Labor (DOL) sent out an “updated” list of factors that business owners should consider when deciding if a worker should be classified as an employee or an independent contractor. However, several lawsuits were filed against the DOL, and they promptly backed down. The DOL recently announced that, starting this month (May 2025), business owners can go back to using the older, more flexible rule.

So, what questions should you be asking today to figure out if your worker is an “Employee”? Here’s a list to get you started:

  • Does this person have potential to earn money and/or lose money based on how well they manage their workday?
  • Has this person made substantial investments in the job, such as bringing their own tools or obtaining their own training, licensure, etc.?
  • How permanent is the relationship between your business and this worker?
  • How much control (and what kind of control) are you exercising over the worker?
  • Does the worker do something that goes to the heart of your business?
  • Does the worker use specialized skills combined with business planning as they carry out the work, or do they simply do what they are told to do?

Underlying these factors is the idea that the more control an employer has over a worker, the more likely they are an employee. In other words, by name, Independent Contractors are more “independent” of the employer than an employee is.

If the list above feels somewhat confusing, you’re in good company! Most business owners feel the same way. This is where we can help. Our team of HR attorneys are standing by to answer your legal questions and help ensure you are classifying your workers correctly. Give us a call anytime!