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Step One

What is the worker’s employment status?

The first step in determining appropriate FICA coverage is to identify whether each worker is an employee or an independent contractor. Whether an individual is classified as an independent contractor or an employee has important tax consequences.

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: behavioral control, financial control and relationship of the parties. The IRS and Social Security Administration compiled a list of 20 factors used in court decisions to help determine whether a worker is an employee or an independent contractor. These factors can indicate whether sufficient employer control is present to establish an employer-employee relationship. The importance of each factor varies depending on the occupation and the context in which the services are performed. The common law factors are designed only as a guide.

For more information about determining a worker's classification contact the IRS and Social Security.

Employee (full-time, part-time, temporary, seasonal)

Is there a Federal-state Agreement, called a 218 Agreement?

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If you don't know if there is an agreement find out using our search

Independent Contractor

FICA taxes should not be withheld from Independent Contractors nor should Independent Contractors be covered by a public retirement plan.