Monday, July 28, 2008

What do your employees really want?

Article by Pam Pumarino, regular contributor to our blog. She holds degrees in business & psychology, and has an extensive background in Customer Service training.



For a while I worked at a Fortune500 HR call center where they did a big hoopla about motivating employees. One of their last attempts was their ‘Fall Challenge.’



Let me say that again, Fall Challenge. Yes, the name alone destined the festivities to the land of despair.



The rules where rather simple, do something right (aka do what you are being paid for at least some of the time) and you’ll get a ticket for a raffle at the end of the busy season.



Great idea, right? Not so fast. The bottom line was that attendance during busy periods did not increase. Morale did not increase. Productivity did not increase. Instead, resentment grew like rampant summer weeds, as good employees watched others--who did one thing right one time--walk away with big prizes.




Why didn’t it work? Well, employees were not asked what they wanted as a reward. Employees were not asked for input for establishing the guidelines. There was a lack of flexibility…one reward seldom fits all—for me it might be money, for you time off might be as good as gold. It created resentment amongst coworkers. It did not take into consideration people who missed work due to important circumstances (kid got chickenpox and husband got foot stuck in the toilet, dog ate shoes, lost both ears rendering self unable to listen to phone calls, etc.).



So what is the lesson learned? Don’t waste valuable time at a corporate table with other managers to figure out what banana you’ll throw your monkeys. Instead, talk with your people, treat them like people, and most importantly LISTEN to what they have to say, as well as what they are not saying. There is no other way for you to find out their wants, needs and motivational hooks. You’ll find that, often, the mere fact of having you truly listen to them might just be what they wanted all along.





LISTEN , LISTEN, LISTEN

Listening is the one activity you do more in life than any other activity except to breathe. How much time and energy do you exert in developing the communication skill that has been with you since birth. Self-leaders capitalize on the power of listening. They listen for what people say, what they don't say, and what they would like to say but don't know how to put into words. When is the last time that you were either involved in or observed a situation in which their was a cost due to a listening breakdown? Most people can identify several recent examples in their own life. The costs can be staggering. SELF-LEADERS LISTEN, LISTEN, LISTEN.



Excerpt from Dr. Bommelje’s Listening Leaders’ website.

What do your employees really want?

Article by Pam Pumarino, regular contributor to our blog. She holds degrees in business & psychology, and has an extensive background in Customer Service training.



For a while I worked at a Fortune500 HR call center where they did a big hoopla about motivating employees. One of their last attempts was their ‘Fall Challenge.’



Let me say that again, Fall Challenge. Yes, the name alone destined the festivities to the land of despair.



The rules where rather simple, do something right (aka do what you are being paid for at least some of the time) and you’ll get a ticket for a raffle at the end of the busy season.



Great idea, right? Not so fast. The bottom line was that attendance during busy periods did not increase. Morale did not increase. Productivity did not increase. Instead, resentment grew like rampant summer weeds, as good employees watched others--who did one thing right one time--walk away with big prizes.




Why didn’t it work? Well, employees were not asked what they wanted as a reward. Employees were not asked for input for establishing the guidelines. There was a lack of flexibility…one reward seldom fits all—for me it might be money, for you time off might be as good as gold. It created resentment amongst coworkers. It did not take into consideration people who missed work due to important circumstances (kid got chickenpox and husband got foot stuck in the toilet, dog ate shoes, lost both ears rendering self unable to listen to phone calls, etc.).



So what is the lesson learned? Don’t waste valuable time at a corporate table with other managers to figure out what banana you’ll throw your monkeys. Instead, talk with your people, treat them like people, and most importantly LISTEN to what they have to say, as well as what they are not saying. There is no other way for you to find out their wants, needs and motivational hooks. You’ll find that, often, the mere fact of having you truly listen to them might just be what they wanted all along.





LISTEN , LISTEN, LISTEN

Listening is the one activity you do more in life than any other activity except to breathe. How much time and energy do you exert in developing the communication skill that has been with you since birth. Self-leaders capitalize on the power of listening. They listen for what people say, what they don't say, and what they would like to say but don't know how to put into words. When is the last time that you were either involved in or observed a situation in which their was a cost due to a listening breakdown? Most people can identify several recent examples in their own life. The costs can be staggering. SELF-LEADERS LISTEN, LISTEN, LISTEN.



Excerpt from Dr. Bommelje’s Listening Leaders’ website.

Friday, July 18, 2008

Improvising Your Approach to Improvement

Improvising Your Approach to Improvement
by Dr. John C. Maxwell

Our well-being and happiness are tied to the notion that our lives can improve. We hope for a better future for our company, our kids, and ourselves. We dream of a tomorrow that's better and brighter than today.

Here are a few improvements many of us desire to see:


We hope to lose weight and improve our fitness
We hope to earn more money and improve our financial standing
We hope to argue less with our spouse and improve our marriage


Over the next year, if we knew our health would deteriorate, our economic situation would worsen, and our closest relationships would unravel, then we'd be depressed. In fact, even if we knew our lives would stay the same, most of us would feel unsatisfied. We're always looking to improve the quality of our lives - it's human nature.

Unfortunately, many of us never go beyond hoping for improvements to actually making them. In this lesson, I'd like to share some insights to help you improvise your approach to improvement.

Develop Habits
The secret of your success is determined by your daily agenda. Leaders who make successful improvements share a common denominator: they form habits of daily action that those who fail to improve never develop. As my friend Andy Stanley says, "Your direction determines your destination." The steps you make each day, for good or ill, eventually chart the path of your life.
Consider the analogy of saving for retirement. Financial advisers counsel us to invest for retirement early in our careers and consistently throughout life. If we do, we can quit working at 65 with a sizeable nest egg. However, if we neglect funding our 401(k) each month, then we end up with nothing. We may still "hope" to win the lottery and secure our financial future, but we've lost the ability to control our fate.

Befriend Discipline
We live in the ultimate quick-fix culture. Everyone wants to be thin, but few people eat healthy and exercise. Everyone wants financial stability, but many refuse to be bothered by a budget. Rather than trouble ourselves with discipline, we opt for diet fads or speculate in the stock market. When we don't see long-term improvements, we discard one fad in favor of another.
In life, there are two kinds of pain: the pain of self-discipline and the pain of regret. The pain of self-discipline involves sacrifice, sweat, and delayed gratification. Thankfully, the reward of improvement softens the pain of self-discipline and makes it worthwhile. The pain of regret begins as a missed opportunity and ends up as squandered talent and an unfulfilled life. Once the pain of regret sets in, there's nothing you can do other than wonder, "What if?"

Admit Mistakes
When trying to improve, we not only risk failure, we guarantee it. The good news is that mistakes generally teach us far more than success. There's no sense pretending we're perfect. Even the best of the best have moments of weakness. That's why it's important to be honest when we fall short, learn from the mistake, and move forward with the knowledge gained.

Measure Progress
You cannot manage what you cannot measure. Identify the areas in which improvement is essential to your success and find a way to track your progress. Keeping score holds you accountable and gives you a clear indicator of whether or not you're actually improving.

Change Continually
Continual change is essential for improvement. One of the great paradoxes of success is that the skills and qualities that get you to the top are seldom the ones that keep you there. The quest to improve forces us to abandon assumptions, embrace innovation, and seek new relationships. If we're complacent for too long, we'll fall behind the learning curve. Once this happens, it's a steep, uphill climb to get back to the top.

The desire for improvement has a degree of discontent in it. Personal growth requires apparently contradictory mindsets: humility to realize you have room to grow but also confidence that improvement is possible.

SUMMARY
Tips for Attaining Improvement:
1. Develop Habits
2. Befriend Discipline
3. Admit Mistakes
4. Measure Progress

5. Change Continually

This article is used by permission from Dr. John C. Maxwell's free monthly e-newsletter, "Leadership Wired," available here.

Improvising Your Approach to Improvement

Improvising Your Approach to Improvement
by Dr. John C. Maxwell

Our well-being and happiness are tied to the notion that our lives can improve. We hope for a better future for our company, our kids, and ourselves. We dream of a tomorrow that's better and brighter than today.

Here are a few improvements many of us desire to see:


We hope to lose weight and improve our fitness
We hope to earn more money and improve our financial standing
We hope to argue less with our spouse and improve our marriage


Over the next year, if we knew our health would deteriorate, our economic situation would worsen, and our closest relationships would unravel, then we'd be depressed. In fact, even if we knew our lives would stay the same, most of us would feel unsatisfied. We're always looking to improve the quality of our lives - it's human nature.

Unfortunately, many of us never go beyond hoping for improvements to actually making them. In this lesson, I'd like to share some insights to help you improvise your approach to improvement.

Develop Habits
The secret of your success is determined by your daily agenda. Leaders who make successful improvements share a common denominator: they form habits of daily action that those who fail to improve never develop. As my friend Andy Stanley says, "Your direction determines your destination." The steps you make each day, for good or ill, eventually chart the path of your life.
Consider the analogy of saving for retirement. Financial advisers counsel us to invest for retirement early in our careers and consistently throughout life. If we do, we can quit working at 65 with a sizeable nest egg. However, if we neglect funding our 401(k) each month, then we end up with nothing. We may still "hope" to win the lottery and secure our financial future, but we've lost the ability to control our fate.

Befriend Discipline
We live in the ultimate quick-fix culture. Everyone wants to be thin, but few people eat healthy and exercise. Everyone wants financial stability, but many refuse to be bothered by a budget. Rather than trouble ourselves with discipline, we opt for diet fads or speculate in the stock market. When we don't see long-term improvements, we discard one fad in favor of another.
In life, there are two kinds of pain: the pain of self-discipline and the pain of regret. The pain of self-discipline involves sacrifice, sweat, and delayed gratification. Thankfully, the reward of improvement softens the pain of self-discipline and makes it worthwhile. The pain of regret begins as a missed opportunity and ends up as squandered talent and an unfulfilled life. Once the pain of regret sets in, there's nothing you can do other than wonder, "What if?"

Admit Mistakes
When trying to improve, we not only risk failure, we guarantee it. The good news is that mistakes generally teach us far more than success. There's no sense pretending we're perfect. Even the best of the best have moments of weakness. That's why it's important to be honest when we fall short, learn from the mistake, and move forward with the knowledge gained.

Measure Progress
You cannot manage what you cannot measure. Identify the areas in which improvement is essential to your success and find a way to track your progress. Keeping score holds you accountable and gives you a clear indicator of whether or not you're actually improving.

Change Continually
Continual change is essential for improvement. One of the great paradoxes of success is that the skills and qualities that get you to the top are seldom the ones that keep you there. The quest to improve forces us to abandon assumptions, embrace innovation, and seek new relationships. If we're complacent for too long, we'll fall behind the learning curve. Once this happens, it's a steep, uphill climb to get back to the top.

The desire for improvement has a degree of discontent in it. Personal growth requires apparently contradictory mindsets: humility to realize you have room to grow but also confidence that improvement is possible.

SUMMARY
Tips for Attaining Improvement:
1. Develop Habits
2. Befriend Discipline
3. Admit Mistakes
4. Measure Progress

5. Change Continually

This article is used by permission from Dr. John C. Maxwell's free monthly e-newsletter, "Leadership Wired," available here.

The Strangest Secret

"The Strangest Secret"
In 1957, Earl Nightingale, speaker, author andco founder of the Nightingale-Conant Corporation,recorded his classic motivational record "TheStrangest Secret." "The Strangest Secret" soldover one million copies and made history in therecording industry by being honored as the firstGold Record for the spoken word. Nightingale,known as the "dean of personal development,"concluded that life's "strangest secret" is that webecome what we think about all day long.

Your belief system, like your computer, doesn'tjudge or even question what you input; it merelyaccepts your thoughts as the truth, the whole truthand nothing but the truth. Think thoughts of defeator failure and you're bound to feel discouraged.Continuous thoughts of worry, anxiety and fear areunhealthy and often manifest in the body as stress,panic attacks and depression.

At the core of Earl's message, he reveals the incrediblepower of positive self-talk, belief and expectation. Whatyou vividly imagine and hold in your subconscious mindbegins to out picture as your reality. Your belief systemnot only defines your reality, but it also shapes yourcharacter and determines your potential.

The Placebo EffectThe ability of the mind to cure a disease even whenthe medicine is known to be worthless is known as the"placebo effect." This occurs in medical trials wheredoctors give patients sugar pills, but tell them they willcure their illness. Often it does, even though the pillscontain nothing of medical benefit. The only thing ofvalue in these medical trials is the patient's own beliefthat the sugar pills will cure them. It's the power of thepatient's belief and expectation alone that produces theimprovement in his or her health.

I recently read a remarkable story about a group ofcancer patients who thought they were being treated withchemotherapy, but were actually given a placebo. Beforetheir treatment began, the patients were informed aboutthe complications associated with undergoing chemotherapytreatment, such as fatigue and loss of hair. Amazingly,based on nothing more than their belief and expectation,nearly one third of the patients who were given the placeboreported feeling fatigued and actually experienced hair loss!

The Power of Affirmation and Positive Self-talkIf you had access to a powerful tool that would enhance yourself-esteem and allow you to reach your full potential wouldyou use it?
A good way to create positive self-talk is through affirmations.An affirmation is a positive statement that represents yourdesired condition or outcome. Interesting enough, yoursubconscious mind doesn't know the difference between areal experience and a vividly imagined "mental" experience.

When he was a struggling young comedian, late at night JimCarrey would drive into the hills overlooking Hollywood andyell at the top of his lungs "I will earn ten million dollars ayear by 1995." When 1995 finally arrived, Jim was the starof the movie "Ace Ventura: When Nature Calls", for whichhe was paid twenty million dollars!

World-class athletes understand the value of affirmation andrecognize the impact of their mental preparation on theirphysical performance. They use the power of positiveaffirmation to reduce anxiety and increase their expectationof achievement. To be of maximum benefit an affirmationmust be simple, encouraging and stated in the present tense.By repeating an affirmation over and over again it becomesembedded in the subconscious mind.
To be effective your affirmation must be stated aloud...

1. In a positive manner with the focus on what you want. Whenyou catch yourself saying or thinking something negative aboutyourself, counteract the negative self-talk with a positiveaffirmation. Start your affirmation with words like "I am..." or"I already have..."
Example:"I close sales with little or no resistance."
"I take good care of my customers and they show theirappreciation by referring their friends to me."

2. In the present tense. Your subconscious mind works in thepresent tense, so avoid words such as can, will, should or could.
Example:"I love doing my work and I am richly rewarded creatively andfinancially."

3. With strong emotion and conviction.

4. Repeatedly. I suggest you read your affirmations eachmorning upon awakening and again each night just beforefalling asleep. Close your eyes and picture the end result.Feel the emotions associated with the affirmation.

Here are some of my favorite affirmations:
"Every day in every way I'm getting better and better!"
"Everything comes to me easily and effortlessly!"
"I love and appreciate myself just as I am!"
"I love doing my work and I am richly rewarded creativelyand financially!"
"I now have enough time, energy, wisdom and money toaccomplish all my desires!"
"Infinite riches are now freely flowing into my life!"
"I am relaxed and centered!"
"I feel happy and blissful!"

Do affirmations really work and can they be used to propel aperson to achieve greatness? As a young boy growing up inLouisville, Kentucky, 12-year-old Cassius Marcellus Clay dreamedof someday becoming the heavyweight boxing champion of theworld. When working out in the gym, Clay would continuouslyaffirm to all within earshot that he was indeed the greatest boxerof all time! While many felt he was brash and boastful, few peopleactually took this 89-pound youngster seriously. Mohammad Aliused his affirmation to become the undisputed heavyweight boxingchampion of the world and arguably one of the most popular andrecognized sports figures of all times!

"Watch your thoughts, for they become words. Choose yourwords, for they become actions. Understand your actions, for theybecome habits. Study your habits, for they will become yourcharacter. Develop your character, for it becomes your destiny." - Anonymous
You show me a salesperson with high self-esteem, a positiveattitude and a healthy work ethic and I'll be able to predict hisor her success in advance... I guarantee it.

John Boe presents a wide variety of motivational andsales-oriented keynotes and seminar programs for salesmeetings and conventions. John is a nationally recognizedsales trainer and business motivational speaker with animpeccable track record in the meeting industry. To haveJohn speak at your next event, visit orcall 877 725-3750.

The Strangest Secret

"The Strangest Secret"
In 1957, Earl Nightingale, speaker, author andco founder of the Nightingale-Conant Corporation,recorded his classic motivational record "TheStrangest Secret." "The Strangest Secret" soldover one million copies and made history in therecording industry by being honored as the firstGold Record for the spoken word. Nightingale,known as the "dean of personal development,"concluded that life's "strangest secret" is that webecome what we think about all day long.

Your belief system, like your computer, doesn'tjudge or even question what you input; it merelyaccepts your thoughts as the truth, the whole truthand nothing but the truth. Think thoughts of defeator failure and you're bound to feel discouraged.Continuous thoughts of worry, anxiety and fear areunhealthy and often manifest in the body as stress,panic attacks and depression.

At the core of Earl's message, he reveals the incrediblepower of positive self-talk, belief and expectation. Whatyou vividly imagine and hold in your subconscious mindbegins to out picture as your reality. Your belief systemnot only defines your reality, but it also shapes yourcharacter and determines your potential.

The Placebo EffectThe ability of the mind to cure a disease even whenthe medicine is known to be worthless is known as the"placebo effect." This occurs in medical trials wheredoctors give patients sugar pills, but tell them they willcure their illness. Often it does, even though the pillscontain nothing of medical benefit. The only thing ofvalue in these medical trials is the patient's own beliefthat the sugar pills will cure them. It's the power of thepatient's belief and expectation alone that produces theimprovement in his or her health.

I recently read a remarkable story about a group ofcancer patients who thought they were being treated withchemotherapy, but were actually given a placebo. Beforetheir treatment began, the patients were informed aboutthe complications associated with undergoing chemotherapytreatment, such as fatigue and loss of hair. Amazingly,based on nothing more than their belief and expectation,nearly one third of the patients who were given the placeboreported feeling fatigued and actually experienced hair loss!

The Power of Affirmation and Positive Self-talkIf you had access to a powerful tool that would enhance yourself-esteem and allow you to reach your full potential wouldyou use it?
A good way to create positive self-talk is through affirmations.An affirmation is a positive statement that represents yourdesired condition or outcome. Interesting enough, yoursubconscious mind doesn't know the difference between areal experience and a vividly imagined "mental" experience.

When he was a struggling young comedian, late at night JimCarrey would drive into the hills overlooking Hollywood andyell at the top of his lungs "I will earn ten million dollars ayear by 1995." When 1995 finally arrived, Jim was the starof the movie "Ace Ventura: When Nature Calls", for whichhe was paid twenty million dollars!

World-class athletes understand the value of affirmation andrecognize the impact of their mental preparation on theirphysical performance. They use the power of positiveaffirmation to reduce anxiety and increase their expectationof achievement. To be of maximum benefit an affirmationmust be simple, encouraging and stated in the present tense.By repeating an affirmation over and over again it becomesembedded in the subconscious mind.
To be effective your affirmation must be stated aloud...

1. In a positive manner with the focus on what you want. Whenyou catch yourself saying or thinking something negative aboutyourself, counteract the negative self-talk with a positiveaffirmation. Start your affirmation with words like "I am..." or"I already have..."
Example:"I close sales with little or no resistance."
"I take good care of my customers and they show theirappreciation by referring their friends to me."

2. In the present tense. Your subconscious mind works in thepresent tense, so avoid words such as can, will, should or could.
Example:"I love doing my work and I am richly rewarded creatively andfinancially."

3. With strong emotion and conviction.

4. Repeatedly. I suggest you read your affirmations eachmorning upon awakening and again each night just beforefalling asleep. Close your eyes and picture the end result.Feel the emotions associated with the affirmation.

Here are some of my favorite affirmations:
"Every day in every way I'm getting better and better!"
"Everything comes to me easily and effortlessly!"
"I love and appreciate myself just as I am!"
"I love doing my work and I am richly rewarded creativelyand financially!"
"I now have enough time, energy, wisdom and money toaccomplish all my desires!"
"Infinite riches are now freely flowing into my life!"
"I am relaxed and centered!"
"I feel happy and blissful!"

Do affirmations really work and can they be used to propel aperson to achieve greatness? As a young boy growing up inLouisville, Kentucky, 12-year-old Cassius Marcellus Clay dreamedof someday becoming the heavyweight boxing champion of theworld. When working out in the gym, Clay would continuouslyaffirm to all within earshot that he was indeed the greatest boxerof all time! While many felt he was brash and boastful, few peopleactually took this 89-pound youngster seriously. Mohammad Aliused his affirmation to become the undisputed heavyweight boxingchampion of the world and arguably one of the most popular andrecognized sports figures of all times!

"Watch your thoughts, for they become words. Choose yourwords, for they become actions. Understand your actions, for theybecome habits. Study your habits, for they will become yourcharacter. Develop your character, for it becomes your destiny." - Anonymous
You show me a salesperson with high self-esteem, a positiveattitude and a healthy work ethic and I'll be able to predict hisor her success in advance... I guarantee it.

John Boe presents a wide variety of motivational andsales-oriented keynotes and seminar programs for salesmeetings and conventions. John is a nationally recognizedsales trainer and business motivational speaker with animpeccable track record in the meeting industry. To haveJohn speak at your next event, visit orcall 877 725-3750.

Saturday, May 10, 2008

Independent Contractor vs. Employee

I've been asked a lot to explain the difference between an Independent Contractor and an Employee. Here is some information that quickly gives an overview of the differences:


Independent Contractors vs. Employees

Are your workers independent contractors or employees? Always a confusing topic which is probably due to the fact that the IRS sets the rules. Nonetheless, the answer can have a profound impact on how much tax you pay as a small business owner.

Knowing whether your workers are or are not employees will affect the amount of taxes you must withhold from their pay. It will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them. Employers who misclassify workers as independent contractors can end up with substantial tax bills as well as penalties for failing to pay employment taxes and failing to file required forms information.

Generally, whether a worker is an employee or an independent contractor depends upon how much control you have as a business owner. Basically, if you have the right to control or direct not only what is to be done but also how it is to be done then your workers are most likely employees. If you can direct or control only the result of the work done, and not the means and methods of accomplishing the result, then your workers are probably independent contractors.

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be -
An independent contractor
A common-law employee
A statutory employee
A statutory nonemployee

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.
The courts have considered many facts in deciding whether a worker is an independent contractor or an employee based on these three categories:


1.) Behavioral Control – direct or control how the work is done. Facts that show whether the business has a right to direct and control. These include:
Instructions - an employee is generally told:
When, where, and how to work
What tools or equipment to use
What workers to hire or to assist with the work
Where to purchase supplies and services
What work must be performed by a specified individual
What order or sequence to follow
Training – an employee may be trained to perform services in a particular manner.


2.) Financial Control – direct or control the financial/business aspects of the worker’s job. Facts that show whether the business has a right to control the business aspects of the worker’s job include:


· The extent to which the worker has unreimbursed expenses
· The extent of the worker’s investment
· The extent to which the worker makes services available to the relevant market
· How the business pays the worker
· The extent to which the worker can realize a profit or loss


3.) Type of Relationship – relates to how the workers and the business owner perceive their relationship. Facts that show the type of relationship include:


Written contracts describing the relationship the parties intended to create
Whether the worker is provided with employee-type benefits
The permanency of the relationship
How integral the services are to the principal activity
For a worker who is considered your employee, you are responsible for:
Withholding Federal income tax,
Withholding and paying the employer social security and Medicare tax,
Paying Federal unemployment tax (FUTA)
Issuing Form W-2, Wage and Tax Statement, annually,
Reporting wages on Form 941, Employer’s Quarterly Federal Tax Return.
Example of an Independent Contractor:

Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies, which she obtained through advertisements. Vera is an independent contractor.


How should I report payments made to independent contractors?


You may be required to file information returns to report certain types of payments made to independent contractors during the year. For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (e.g. independent contractors) for services performed for your trade or business.


Who is a Common-Law Employee (Employee)?

Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.


To determine whether an individual is an employee or independent contractor under the common law, the relationship of the worker and the business must be examined. All evidence of control and independence must be considered. In an employee-independent contractor determination, all information that provides evidence of the degree of control and degree of independence must be considered.


Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties.

Example of an employee:

Example: Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. She works 6 days a week, and is on duty in Bob's showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager's approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Bob. Bob also pays the cost of health insurance and group-term life insurance for Donna. Donna is an employee of Bob Blue.


Statutory Employees

If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute ( statutory employees ) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social security and Medicare taxes , below.
A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.


A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.


A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer s business operation. The work performed for you must be the salesperson s principal business activity. Refer to the Salesperson section located in Publication 15-A, Employer s Supplemental Tax Guide for additional information.


Statutory Nonemployees

There are two categories of statutory nonemployees: direct sellers and licensed real estate agents. They are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:


Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked and
Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes.







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