In California are you an Employee or Independent Contractor? What if you’re in Barbering or Cosmetology? Read up!
Generally, whether a worker is an employee or an independent contractor can be determined through the application of the factors contained in common law or employment and statutory provisions of the California Unemployment Insurance Code.
If a worker is an employee under common law, the business that employs the worker must report the worker's earnings to the Employment Development Department (EDD) and must pay employment taxes on those wages. If the worker is an independent contractor and the business pays the worker $600 or more in payments, the business must file a Form 1099-MISC with the Internal Revenue Service (IRS). The business must also file a Report of Independent Contractor(s) (DE 542) with the 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, view the latest revision of the California Employer’s Guide (DE 44) available on the EDD website at www.edd.ca.gov/Payroll_Taxes/Forms_and_Publications.htm.
The basic test for determining whether a worker is an independent contractor or an employee is whether the principal has the right to 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 control, the worker will generally be an independent contractor.
If, on the face of the relationship, it is not clear whether the principal has the "right of control," there are secondary factors that are considered to determine the existence or nonexistence of the right of control.
The enclosed worksheet addresses the basic test and secondary factors through a series of questions. If use of the worksheet clearly demonstrates that a worker is an employee, you should contact the 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.
Click here for worksheet and more information: https://www.edd.ca.gov/pdf_pub_ctr/de38.pdf
Barbering and Cosmetology Information on Independent Contractors click here: https://www.edd.ca.gov/pdf_pub_ctr/de231c.pdf