The tests differ between the IRS, the Department of Labor and individual states, but they ask similar questions. Who controls how the work is done. Who supplies the tools. Whether the worker can profit or lose. Whether the arrangement is permanent.
A written contract labeling somebody a contractor carries little weight against those facts. Where the classification is wrong, exposure includes back taxes, unpaid overtime, penalties and interest, usually across every worker in the same category rather than the one who complained.
This is worth auditing before you scale a contractor workforce, not after.
