A contractor vs employee test is the legal or regulatory mechanism a government or court applies to establish whether an individual working for another party should be classified as an employee or as a self-employed contractor. Different jurisdictions apply different tests, but they typically examine control over work methods, economic dependence, integration into the business, and the ability to profit or bear risk.
In the United States, multiple tests coexist. The IRS common-law test looks at behavioural control, financial control, and relationship type. Many US states apply the stricter ABC test, which presumes employment unless the engaging company can prove the worker is free from control, performs work outside the usual business, and is customarily engaged in an independent trade. The DOL's 2024 final rule under the FLSA applies an economic reality test.
In the Netherlands, the Hoge Raad (Supreme Court) assesses the working relationship under the Wet DBA framework by examining factors across the full engagement context: personal performance obligations, authority relationships, and payment structure. The Dutch government has proposed additional statutory clarity through the Verduidelijking Arbeidsrelaties legislation, expected to affect how companies structure ZZP engagements from 2026 onward.