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Employee or Independent Contractor? A Guide for DC Business Owners

Paying someone as a contractor can save money, but only if they really are one. Getting it wrong can be costly.

The label does not control

Calling someone a contractor in a written agreement does not make them one. Agencies and courts look at how the relationship works in practice.

What agencies look at

Common factors include how much control you have over when, where, and how the work is done, whether the person has their own business and other clients, who supplies the tools, and whether the work is central to your business.

The risks of misclassification

A worker treated as a contractor who should be an employee can lead to unpaid payroll taxes, penalties, and wage claims. Different agencies use different tests, so one answer may not fit all of them.

Ways to lower the risk

Use a written contractor agreement, let the contractor control their own methods and schedule, keep their work separate from your employees’, and review the relationship when it changes.

When to call a lawyer: Call a lawyer before you hire your first contractor in a role that looks like a regular job.

This guide is general information, not legal advice for your situation.

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