HR & Payroll Tools

Contractor or Employee Quiz

Is your worker an independent contractor or an employee? Take the IRS 20-factor quiz, get a verdict and a misclassification risk score in two minutes.
Last update:
October 15, 2026
Not sure where you stand?
Get a second opinion before the IRS gives one

Misclassification is back taxes, penalties and benefits liability. A CoAd HR specialist will review this worker with you in 15 minutes and tell you whether the 1099 holds up. No pitch, no obligation.

Review this classification

Paying someone as a 1099 contractor when the IRS sees an employee is one of the most expensive mistakes a small business can make: back payroll taxes, penalties, interest and sometimes benefits and overtime owed. The IRS looks at who controls the work. Answer the 20 questions below for one worker and the quiz weighs the answers the way the IRS does. If you are near the line, read how HR outsourcing handles classification or use the employee cost calculator to see what converting a contractor would cost.

Contractor or employee? The IRS 20-factor quiz

Answer for one worker. Questions 1 to 4 point toward contractor when yes; 5 to 20 point toward employee when yes.
1. Can the worker make a profit or take a loss on the work?Real economic risk, not just the risk of not being paid.
2. Does the worker have money invested in their own equipment or facilities?More investment points toward contractor.
3. Does the worker do this kind of work for other companies at the same time?Common for contractors.
4. Does the worker offer their services to the general public?Other clients, a website, a business name.
5. Can you tell the worker when, where and how to do the work?
6. Do you train the worker to do the job your way?
7. Is the work a core, necessary part of your business?
8. Must the worker do the work personally rather than delegate it?
9. Do you hire, supervise or pay the worker's helpers?Contractors staff their own jobs.
10. Is this an ongoing relationship rather than a defined project?Frequent but irregular still counts.
11. Do you set the worker's hours?
12. Must the worker spend essentially full time on your work?
13. Must the work be done on your premises or a location you control?A no is not conclusive on its own.
14. Do you decide the order or sequence of the work?
15. Must the worker submit regular reports to you?
16. Do you pay by the hour, week or month rather than by the job?Contractors are usually paid per project or commission.
17. Do you reimburse the worker's business or travel expenses?
18. Do you supply the tools, equipment or materials?
19. Can you dismiss the worker at will?Contractors can only be released per the contract.
20. Can the worker quit at any time without liability?A contractor is obligated to finish the contract.
Verdict
Probably an independent contractor
Not sure where you land? Get it checked before the IRS does

Misclassification means back taxes, penalties and benefits liability. CoAd's HR team reviews classification and runs contractors and employees on one platform.

Talk to an HR expert
Based on the IRS 20-factor common law test (Rev. Rul. 87-41), now grouped by the IRS into behavioral control, financial control and relationship type; no single answer is decisive. California, New Jersey, Massachusetts and others apply a stricter ABC test. Educational, not legal advice.

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