To help determine whether a relationship is that of principal and contractor rather than employer and employee, ask the following questions. (These questions provide the framework for an employer self-analysis. They are not intended to be a substitute for advice of counsel concerning a particular situation.)

1. Does the Company have the right to control the manner and method used to perform the service?

2. Has the Company specified the final result that it seeks?

3. Is the work closely supervised by the Company?

4. Does the Company require regular progress reports?

5. Does the individual perform work that differs from the work performed by the Company's employees?

6. Does the individual perform the work off the Company's premises?

7. Does the individual establish his/her own work schedule?

8. Does the individual furnish his/her own tools and equipment?

9. Does the individual consider him/herself to be an independent contractor?

10. Does the individual operate his/her own business?

11. Does the individual hold him/herself out to the public as a business (e.g., purchase or lease of a building or office space, purchase of tools and equipment, etc.)?

12. Does the individual have a certificate of incorporation, partnership, or d/b/a?

13. Has the individual made a significant investment in his/her business (e.g., purchase or lease of a building or office space, purchase of tools and equipment, etc.)?

14. Is the individual engaged by anyone else to perform the same or similar services sought by your Company?

15. If so, what is the relationship between the individual and the other purchaser of services (e.g., employer- employee)?

16. Does the work require a particular skill?

17. If so, is the individual the only one who can do the work?

18. If not, do the Company's employees possess the required skill?

19. Is the individual required to hold any particular license to perform the work?

20. If so, do any of the Company's employees hold such a license?

21. Does the individual file tax returns that indicate self- employment status?

22. Does the Company file 1099 forms with the IRS for those individuals it considers to be independent contractors?

23. Is the individual paid on a project basis rather than on an hourly, weekly, or monthly basis?

24. Does the individual invoice the Company for the services provided?

25. Does the individual use specially prepared invoices that bear that Company's name?

26. Does the individual have the opportunity to make a profit?

27. Does the individual risk any loss?

28. Will performance of the work require training provided by the Company?

29. Can the Company terminate the relationship at any time?

30. Do the parties have a written agreement?

31. Has the agreement been reviewed by labor counsel?

32. Has your Company's use (or proposed use) of "consultants" or "independent contractors" been reviewed by labor counsel? If so, how long ago? Discussion of the foregoing questions will provide a framework to help you evaluate whether the person your Company intends to engage will be considered an independent contractor or an employee under applicable state and federal laws.

Note: If your Company intends to engage people as independent contractors, the proposed relationship and contractor agreements should be reviewed by labor counsel. Similarly, if your Company already engages people as independent contractors, the relationships and written agreements should be reviewed by labor counsel.