Flag Item Worker Classification
Are all workers properly classified as either employees or as independent contractors?
Note: Under the common-law standards applied by the IRS, there are three categories of evidence (Behavioral
Control, Financial Control and Relationship of the parties) that should be considered to determine whether the
worker is an employee or independent contractor.
963, Chapter 4, for information about worker classification.
SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax
Withholding, can be submitted to the IRS to obtain a determination on whether a particular worker is an
independent contractor or employee of the entity.
Does the entity have any of the following categories of workers?
If yes, are they classified as employees?
A. Elected officials
Note: A public official has authority to exercise the power of the government and does so as an agent and
employee of the government. For this reason, the Supreme Court has held that public officials are employees. A
public official performs a governmental duty exercised pursuant to a public law. A public office is a position created
by law, holding a delegation of a portion of the sovereign powers of government to be exercised for the benefit of
Elected officials are subject to a degree of control that typically makes them employees under the common law.
Elected officials are responsible to the public, which has the power not to reelect them. Elected officials may also be
subject to recall by the public or a superior official. In any event, elected officials are employees for income tax
withholding purposes under Internal Revenue Code §3401(c). Examples of public officials include, but are not
limited to; governor, mayor, county commissioner, judge, justice of the peace, sheriff, constable, registrar of deeds,
building and plumbing inspectors.
B. Appointed officials
Note: Generally, few appointed officials have sufficient independence such that they will not be considered
common-law employees. See
C. Fee-based positions
Note: In general, if an individual performs services as an official of a governmental entity and the remuneration
received is paid from governmental funds, the official is an employee and the wages are subject to Federal
Do any employees also receive Form 1099-MISC, Miscellaneous Income, for services that
are substantially similar to the services reported as wages on Form W-2, Wage and Tax
If yes, the amounts reported on Forms 1099-MISC should be reported as Form W-2 wages subject to applicable
employment taxes and not reported on Form 1099-MISC.
Catalog Number 66247V