Encumbrance No. E000 Name of Contractor:
INDEPENDENT CONTRACTOR VERIFICATION
Mistakenly classifying an employee as an independent contractor can result in severe fines and
penalties from the IRS and the Colorado Department of Revenue, as well as jeopardizing
qualified benefit plans for our existing employees.
The following questionnaire is based upon the 20 factors used by the IRS to determine
whether someone is an employee or an independent contractor. In theory, you should only be
concerned with the results of the work, not the way in which it is performed. These are
intended only as a guide; the importance of each factor will, of course, depend upon the
individual circumstances. If you answer “yes” to all of the first four questions, you’re probably
dealing with an independent contractor; “yes” to any of questions 5 through 20 means your
worker is probably an employee.
Human Resources will deny any encumbrance/personal service contract—whether or not the
person is an independent contractor--that (1) negatively impacts any current classified
employee that could possibly result in the a reduction of hours or layoff; (2) is with any person
who has been employed by the college within the last six months doing the same type of
work he/she performed while an employee of the college or the state of Colorado; or (3) is for
a service that has not been waived by the CO Department of Personnel & Administration.
yes no 1. Profit or loss. Can the person make a profit or suffer a loss as a result of the
work, aside from the money earned from the project? This should involve real
economic risk—not just the risk of not getting paid. For instance, a bidding
process involves this type of risk where the contract quote needs to cover any
expenses, materials, overtime, and unexpected contingencies.
yes no 2. Investment. Does the person have an investment in their own equipment
&/or facilities used to perform the work? The greater the personal investment,
the more likely it is independent contractor status.
yes no 3. Works for more than one person or firm. Does the person work for more
than one company at a time? This tends to indicate independent contractor
status, but isn’t conclusive since employees can also work for more than one
yes no 4. Services offered to the general public. Does the worker offer services to
the general public? Advertising show independence—yellow pages, website,
etc.—or even a dated list of clients, with scope of work summary even better.
no yes 5. Instructions. Do you have the right to give the person instructions about
where, when, and how to work? This shows control over the worker.
no yes 6. Training. Do you train the person to do the job in a particular way?
Independent contractors are already trained--& not by us.
no yes 7. Integration. Are the person’s services so important to your operations that
they have become a necessary part of the business? This may show that the
worker is subject to your control.
no yes 8. Services rendered personally. Must the person provide the services
personally, as opposed to delegating tasks to someone else? This indicates that
you are interested in the methods employed &/or that specific person, and not
just the results.
no yes 9. Hiring assistants. Do you hire, supervise, and pay the person’s assistants?
Independent contractors hire and pay their own staff, including employment
no yes 10. Continuing relationship. Is there an ongoing relationship between the
person and yourself? A relationship can be considered ongoing if services are
performed frequently, but irregularly, or if the person was an employee within
the last 6 months performing the same duties or type of work for the State of
no yes 11. Work hours. Do you set the person’s hours? Independent contractors are
master of their own time, allowing them to complete a project ahead of
no yes 12. Full-time work. Must the person spend all of his or her time on your job?
Independent contractors choose when and where they will work.
no yes 13. Work done on premises. Must the individual work on your premises, or do
you control the rout or location where the work must be performed?
Answering no by itself does not mean independent contractor status as the
nature of the scope of the work must be taken into consideration.
no yes 14. Sequence. Do you have the right to determine the order in which services
are performed? This would show control over the worker.
no yes 15. Reports. Must the person give you reports accounting for his/her actions?
This may show lack of independence.
no yes 16. Pay schedules. Do you pay the person by the hour, week, or month?
Independent contractors are generally paid at the completion of the job or
phase, or on commission, although by industry practice, some are paid by the
no yes 17. Expenses. Do you pay the person’s business or travel costs? This tends to
show control. Expenses should be built into the quote for services if an
no yes 18. Tools and materials. Do you provide the person with equipment, tools, or
materials? Independent contractors generally supply the materials for the job
and use their own tools and equipment.
no yes 19. Right to fire. Can you fire the person? An independent contractor can’t be
fired without subject you to the risk of a breach of contract lawsuit.
no yes 20. Right to quit. Can the person quit at any time, without incurring liability?
An independent contractor has a legal obligation to complete the contract,
even if it results in financial loss.
Attach any additional documentation or explanation that you feel should be considered. The
Human Resources Specialist will contact the responsible WSC employee with a final
Signed by _______________________________________________ Date
Responsible WSC employee