Form De 38 - Worksheet On Employment Status - 2009 printable pdf download

EMPLOYMENT DETERMINATION GUIDE

Purpose:

This worksheet is to be used by the proprietor of a business to determine whether a worker is

most likely an employee or an independent contractor.

General Information:

Generally speaking, whether a worker is an employee or an independent contractor depends

on the application of the factors contained in the California common law of employment and

statutory provisions of the California Unemployment Insurance Code.

If a worker is an employee under the common law of employment, the business by which the

worker is employed must report the worker's earnings to the Employment Development

Department (EDD) and must pay employment taxes on those wages. If the business pays

$600 or more in payments to an independent contractor, the business must file a Form 1099-

Misc with the Internal Revenue Service (IRS) and must file a Report of Independent

Contractor(s) (DE 542) with EDD within 20 days of either making payments totaling $600 or

more, or entering into a contract for $600 or more with an independent contractor in any

calendar year. For more detailed information regarding your independent contractor reporting

requirements, obtain the latest revision of the California Employer’s Guide (DE 44).

The basic test for determining whether a worker is an independent contractor or an employee

is whether the principal has the right to direct and control the manner and means by which the

work is performed. When the principal has the "right of control," the worker will be an

employee even if the principal never actually exercises the control. If the principal does not

have the right of direction and control, the worker will generally be an independent contractor.

If it is not clear from the face of the relationship whether the worker or the principal has the

"right of control," reference is made to a list of secondary factors that are evidence of the

existence or nonexistence of the right of control.

If use of the attached worksheet clearly demonstrates that a worker is an employee, you should

contact EDD and arrange to report the worker and pay the relevant taxes. You may also want

to contact the IRS and your workers' compensation insurance carrier to ensure that you are in

compliance with federal tax laws and with state workers' compensation statutes.

If after completing the worksheet you are not sure whether the worker is an independent

contractor or employee, you may also contact the Taxpayer Assistance Center for advice by

calling (888) 745-3886 or request a written ruling by completing a Determination of

Employment Work Status (DE 1870). The DE 1870 is designed to analyze a working

relationship in detail and serves as the basis for a written determination from EDD on

employment status.

DE 38 Rev. 2 (4-09) (INTERNET)

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Form De 38 - Worksheet On Employment Status - 2009