What is the classification process?
Laura avatar
Written by Laura
Updated over a week ago

1. What is an Independent Contractor?

The Staffing Industry Analysts define an Independent Contractor as A self-employed individual performing services for a company under a contract for services. The individual may provide their services as a freelance self-employed person or through the intermediary of a single-person corporate entity (in the UK, a limited company known as a “personal service company” or “PSC”; in the US, an LLC, corporation, or S corporation).

Unlike employees, Independent Contractors are free to perform their work as they see fit, with limited or no control over the manner in which the work is performed. Tax authorities in many countries use the concept of “control” with respect to behavior, together with financial autonomy and a range of other tests to determine the true nature of the relationship between the parties for tax liability purposes. These tests vary by state and country but follow broadly similar principles.

2. What is an Independent Contractor classification process?

Understanding the differences between an Independent Contractor and a W-2 Employee is very important as misclassifying a worker as an Independent Contractor instead of an Employee creates great financial risk for the hirer. In the U.S there are over 2,000 labor laws and more than 30 states have laws about working as a freelancer.

What do we review?

1. The role; including location, payment type, assignment length, description of work, amount of required hours, etc.

2. The independent nature of the worker; are they incorporated, do they have multiple clients/sources of income, have they invested in their business, can they make a profit or loss, do they control when and how they perform their work, etc.

We also review documents that provide proof of statements about the Independent Contractor: proof of incorporation, proof of business income from other clients, business insurance, etc.

3. What are the required documents from an Independent Contractor?

You should be ready to demonstrate the independent nature of a business. You may not have all these documents, but you should upload as many as you can. Not providing them may delay your application, or in some cases mean we cannot approve you as an Independent Contractor.

1. Certificate of Incorporation

2. DBA certificate - if applicable

3. Certificate of Good Standing from your state

4. Business license (if required by your state/municipality)

5. Proof of business income from at least two other clients

6. Certificate of Insurance

7. Marketing materials (recommended)

8. Proof of investment (recommended)

4. What if I do not have a Certificate of Incorporation?

If your business is not incorporated this will drastically reduce the likelihood of being classified as an Independent Contractor.

5. What happens after the classification is completed?

There are two possible outcomes from the classification:

- Approved = worker is approved to be engaged as an Independent Contractor

- Not approved = worker is not approved to be engaged as an Independent Contractor so they will receive an invite to be onboarded as a W-2 employee.

6. How long does the Independent Contract classification process take?

Providing documentation: Typically takes 1 day. Our staffing partner monitors workers in onboarding and identify anyone stalling in the process and reach out directly.

Classification outcome: Typically after you provide the documentation we will review it within 1 business day.

Did this answer your question?