Worker Classification

When people call about this

What this usually looks like

• The IRS or the EDD is questioning how your workers are treated
• A former contractor filed for unemployment or workers’ compensation
• You received a Form SS-8 determination you disagree with
• Your industry treats everyone as a contractor and you assumed that settled it

How it actually works

The part that decides the outcome

The question is whether the worker is an employee for whom the employer must withhold taxes and carry workers’ compensation coverage, or an independent contractor for whom there is no withholding and no coverage. Getting it wrong is expensive in both directions, and the answer comes from how the relationship actually operated rather than from what the agreement called it.

A reclassification is retroactive. The liability arrives as unpaid withholding across open periods, with penalties, and it can reach individuals personally through the trust fund route.

California adds its own layer. State and federal tests are not identical, and the EDD reaches conclusions independently, so a business can be right federally and wrong at the state level on the same set of facts.

The engagement

How we work a case like this

1. Test the relationship

Control, integration, economic reality — measured against the standard the agency is applying.

2. Contain the periods

Which years are open, and what relief for prior years the facts support.

3. Fix it forward

A treatment that is defensible going forward, so the same exposure stops accruing.

Related matters

These rarely arrive on their own

Tax problems overlap. The pages below are the ones that most often belong in the same file as this one.

This page is general information, not advice for a specific situation. Available procedures depend on the actual record and on current law, which changes. Confirm before acting, or ask this office to review your own facts.