The HR Dictionary

Common-Law Test

The common law control test is a basic test, using the common law rules, for determining whether a relationship exists between an employee and the employer or firm that they work for. Under the common-law test, the employer has the right to tell the employee what to do, how, when, and where to do the job. A person that fulfills the requirements outlined in the Common-Law test can be considered an employee.

Employee and Independent Contractor 

Although a firm may pay both an employee and an independent contractor for the same or comparable work, there are significant legal distinctions between the two. The employer deducts income tax, social security, and medicare from the salaries paid to the employees while the business does not deduct taxes from the independent contractor's payment. Independent contractors are also exempt from labor and employment rules.