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Everything Contractors in Tennessee Should Know About the 20-Factor IRS Test

Effective January 1, 2020, the Volunteer State will adopt the same 20-factor test performed by the Internal Revenue Service (IRS) to define whether an employee qualifies as an independent contractor or employee. In other words, Tennessee will no longer be the odd one out when it comes to this important aspect of worker classification; they’re aligning their processes with those used by the federal government, which means roofing contractors will be affected. 

In contrast to the “ABC” test formerly honored by Tennessee legislators, the 20-factor IRS standard consists of 20 unique identifiers designed to accurately determine worker classification. This nearly triples the number of considerations previously considered under Tennessee’s former process. In this article, a roofing attorney in Tennessee will shed light on some important distinctions between these two tests and cover all 20 factors considered by the 20-factor IRS test.

Breaking Down the Former Test

Under the former test, Tennessee worker classifications for employees and independent contractors were determined by examining the following seven factors:

  1. The right to control work-related conduct
  2. The right of termination
  3. Payment method
  4. The ability to choose and employ assistance
  5. Provisions of tools and equipment
  6. Autonomy of schedule
  7. Non-exclusivity 

The 20-Factor IRS Test

By contrast, the 20-factor IRS test takes a more granular approach to worker classification by taking a closer look at various criteria, including:

  1. Is the worker required to comply with instructions regarding when, where, and how to work at the behest of another worker? 
  2. Must the worker be trained by an experienced employee to learn how to perform their work-related duties in a specific manner?
  3. Are the worker’s services integrated into the operation of the business and are their actions seemingly subject to the control of a supervisor?
  4. If services are required to be rendered personally, is the entity supervising the work interested in the methods used to complete the task as well as the end result?
  5. Is the person overseeing the services able to hire, supervise, and pay assistants?
  6. Is there an ongoing relationship between the worker and the entity for whom the services are performed? And does this relationship resemble an employer-employee relationship?
  7. Does this person abide by predetermined working hours?
  8. Does the person work full-time hours? And is there an implied restriction pertaining to outside work?
  9. Is the work performed in a location that is owned by the person the services are being performed for? 
  10. Is the person in control of the sequence in which their work-related duties are performed? Or is this sequence advised by another entity?
  11. Is the person required to submit reports on their productivity or other work-related functions?
  12. Is the person paid by the hour, week, or month? Are these payment installments the result of a partitioned lump sum agreement? Is the person paid strictly on the basis of commissions? 
  13. Are business and travel expenses paid for by the person for whom the services are being performed? 
  14. Did the person utilize their own tools, materials, and equipment? Or were these items furnished by the person for whom the services were performed?
  15. Did the worker have to invest their own money into facilities to capably perform their job? 
  16. Can the worker experience a loss in profit as the result of their services?
  17. Does the worker perform more than de minimis services for multiple, unrelated persons or firms simultaneously?
  18. Does the worker render his/her services available to the general public on a regular or consistent basis?
  19. Can the person terminate the employment of another worker?
  20. Can the worker terminate their relationship with the person for whom the services are being performed at any time without any fear of liability?

If you would like to speak with a roofing lawyer in Tennessee, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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