Tennessee: Chooses the Former IRS 20-Factor Test to Determine Independent Contractor Status

APPLIES TO

All Employers with TN Independent Contractors

EFFECTIVE

January 1, 2020

QUESTIONS?

Contact HR On-Call

(888) 378-2456

HB 539 rejected the state appeals court adoption of the “ABC” test, and implemented the historical IRS 20-factor test to determine independent contractor status. The bill defines employment status where “the individual performs services for an employer for wages and the services performed by the individual qualify as an employer-employee relationship” based on the 20-factor test. Although the 20-factor test is no longer the official IRS test, several states still look to the standard when determining what employment status applies.

Generally, the 20-factor test looks at the behavioral control, financial control, and the type of relationship of the parties. None of the factors are determinative of an employment relationship and there is no presumption of employee status. Although the “ABC” test is largely more restrictive than the 20-factor test, employers should still review independent contractor relationships with legal counsel before the law goes into effect.

Action Items

  1. Have independent contractor status reviewed with legal counsel for compliance.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2019 ManagEase

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *