Modern Counsel for Growing Companies
In plain English
Treating a worker as an independent contractor or another category when the applicable law treats the person differently. Consequences can include tax, unemployment, wage, benefit, or other liabilities. Different laws use different tests, so a contract label or result under one statute does not settle classification for every purpose.
Types and key distinctions
Behavioral Control
A category of factors examining whether a business has the right to direct how a worker performs services, including instructions, training, methods, and evaluation. It is relevant to some worker-classification tests, particularly federal tax analysis. No single factor or contract label determines status under every employment law.
Financial Control
A category of worker-classification factors addressing the economic aspects of the relationship, such as investment, expenses, payment method, and opportunity for profit or loss. It is relevant to federal tax analysis but is not a universal standalone test. Other laws may apply different standards to the same worker.
Right of Control
The legal or practical ability to direct how work is performed, rather than merely specify the desired outcome. It is central to several employee-classification analyses, including Texas unemployment law. An unexercised right can still matter, and other employment statutes may use different or additional tests.