We look at four factors in trying to determine whether it's a PSB—in other words, whether it's an employee versus an independent contractor.
The first factor we look at is control. Control means we look to see whether the payer of the service controls the what, when, and where: what the worker does, how the worker does his business, and where he does his business. That's part of what we look at. We also look to see whether there is a subordination aspect to it.
The second factor we look at is the opportunity for profit or the risk of loss. So we look to see whether the independent contractor could make a profit. We look at things such as, is he able to negotiate a contract; can he have additional clients? In terms of the risk of loss, we look to see if he's bearing some of the risk associated with the work he does. Could his expenses be higher than his income?
The other factor we look at is the tools. Who owns the tools? Normally in an employer-employee relationship the tools are owned by the payer, so we look at that, at how much investment has been made in the tools and who is responsible. Who bears the risk for maintenance, insurance, cost of repairs, and so on?
Integration is the last factor we look at: to what extent is the work done by the worker integrated into the payer's business?