Who's the Employer?

Answer: An outstanding question, and one better posed to Congress and to the various regulatory agencies.

Seriously, different laws have different purposes, and are written by different committees at different times. I remember my frustration as a law student at seeing in in the text for a tax course that "the word 'gift' is defined differently for income, estate, and gift tax purposes. In fact the difference is so severe, that some have suggested using three different words -- gaft, geft, and gift -- to describe the concept."

While it is frustrating for practitioners, that is part of the environment in which we work. The IRS makes it very plain in their Audit Guidelines, at page 2-24:

State law characterization

State laws, or determinations of state or federal agencies, may characterize a worker as an employee for purposes of various benefits. Characterizations based on these laws or determinations should be disregarded, because the laws or regulations involved may use different definitions of employee or be interpreted to achieve particular policy objectives.

For example, state laws determine whether workers are employees for purposes of workers’ compensation and unemployment insurance. Because the definition of "employee" for these purposes is often broader than under the common law rules, eligibility for these benefits should be disregarded in determining worker status.

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