• To satisfy IRS law, it is important to determine whether a worker is an independent contractor or an employee.
• The determination of independent contractor or employee is made by examining the right to control how, when, and where the person performs services.
• Courts consider behavioral control, financial control and the type of relationship when determining whether a worker is an employee or an independent contractor.

The Federal Motor Carrier Safety Administration (FMCSA) does not use the same definition for an “employee” as the Internal Revenue Service (IRS) or the Department of Labor (DOL) does. The FMCSA’s definition of an “employee” is found in 390.5:

• “Any individual, other than an employer, who is employed by an employer and who in the course of his or her employment directly affects commercial motor vehicle safety. Such term includes a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle), a mechanic, and a freight handler.”

As far as contracted or leased drivers go, the FMCSA considers them employees and expects the carrier to ensure that they are compliant.

To satisfy IRS law, it is important to determine whether a worker is an independent contractor or an employee. This determination is complex but is essentially made by examining the right to control how, when, and where the person performs services. It is not based on how the person is paid, how often the person is paid, or whether the person works part-time or full-time. The general rule is that an individual is an independent contractor if the person for whom the services are performed (lessee) has the right to control or direct only the result of the work, and not what will be done and how it will be done or the method of accomplishing the result.

The courts have considered many facts in deciding whether a worker is an independent contractor or an employee. These facts fall into three main categories:

1. Behavioral control — facts that show whether the business has a right to direct and control how the work is done through instructions, training, or other means.
2. Financial control — Facts that show whether the business has a right to control the financial and business aspects of the worker’s job.
3. Type of relationship.

The IRS provides information to assist in determining employee vs. independent contractor status at the following links:

Topic 762 - Independent Contractor vs. Employee: https://www.irs.gov/taxtopics/tc762

IRS Tax Publications: Independent Contractor or Employee: https://www.irs.gov/pub/irs-pdf/p1779.pdf

Publication 15-A Employer’s Supplemental Tax Guide: https://www.irs.gov/pub/irs-pdf/p15a.pdf