IC 22-2-15
    Chapter 15. Guidelines and Procedures for InvestigatingQuestions and Complaints Concerning Employee Classification

IC 22-2-15-1
"Department"
    Sec. 1. As used in this chapter, "department" refers to thedepartment of labor created by IC 22-1-1-1.
As added by P.L.110-2010, SEC.22.

IC 22-2-15-2
Development of guidelines and procedures concerning employeeclassification; contents; exemptions; plan for implementation
    Sec. 2. (a) The department shall develop guidelines andprocedures for investigating questions and complaints concerningemployee classification and a plan for implementation of thoseguidelines and procedures.
    (b) The guidelines and procedures must do the following:
        (1) Cover at least the following:
            (A) Who is eligible to file a complaint. The guidelines andprocedures must allow any aggrieved person to file acomplaint and must indicate what evidence is needed toinitiate an investigation.
            (B) Applicable and appropriate penalties, taking intoconsideration:
                (i) the financial impact on both employers andmisclassified employees; and
                (ii) whether the employer has previously misclassifiedemployees.
            (C) Mechanisms to share data with appropriate stateagencies to assist those agencies in determining compliancewith and enforcing state laws concerning misclassifiedemployees and to recoup contributions owed, depending onthe level of culpability.
            (D) Record keeping requirements for contractors, includingany records necessary for the department to investigatealleged violations concerning misclassification ofemployees.
            (E) Investigative procedures.
        (2) Apply to public works and private work projects for theconstruction industry (as described in IC 4-13.5-1-1(3)),including demolition.
        (3) Apply to any contractor that engages in construction and isauthorized to do business in Indiana.
        (4) Provide a remedy for an employer or a misclassifiedemployee in response to:
            (A) any retaliation that occurs as the result of aninvestigation or a complaint; and
            (B) any complaints that the department determines arefrivolous or that are filed for the purpose of harassment.        (5) Provide that in carrying out this chapter the department hasthe same inspection, investigative, and enforcement powers thatthe department has in enforcing the labor laws of this state,including powers described in IC 22-1-1.
    (c) The guidelines and procedures may include other elements asdetermined by the department.
    (d) The department shall exempt the following from theguidelines and procedures developed under this chapter:
        (1) Residential construction of a single family home or duplexif the builder builds less than twenty-five (25) units each year.
        (2) An owner-operator that provides a motor vehicle and theservices of a driver under a written contract that is subject toIC 8-2.1-24-23, 45 IAC 16-1-13, or 49 CFR 376, to a motorcarrier.
As added by P.L.110-2010, SEC.22.

IC 22-2-15-3
Use of Internal Revenue Code definitions; use of Internal RevenueService factors
    Sec. 3. In developing the guidelines and procedures under thischapter, the department shall use:
        (1) the definition of "employee" used in Section 3401(c) of theInternal Revenue Code; and
        (2) the following factors used by the Internal Revenue Serviceto determine whether a worker is an independent contractor:
            (A) Instructions. A worker who is required to comply withother persons' instructions about when, where, and how heor she is to work is ordinarily an employee. This controlfactor is present if the person or persons for whom theservices are performed have the right to require compliancewith instructions. See, for example, Rev. Rul. 68-598,1968-2 C.B. 464, and Rev. Rul. 66-381, 1966-2 C.B. 449.
            (B) Training. Training a worker by requiring an experiencedemployee to work with the worker, by corresponding withthe worker, by requiring the worker to attend meetings, or byusing other methods, indicates that the person or persons forwhom the services are performed want the servicesperformed in a particular method or manner. See Rev. Rul.70-630, 1970-2 C.B. 229.
            (C) Integration. Integration of the worker's services into thebusiness operations generally shows that the worker issubject to direction and control. When the success orcontinuation of a business depends to an appreciable degreeupon the performance of certain services, the workers whoperform those services must necessarily be subject to acertain amount of control by the owner of the business. SeeUnited States v. Silk, 331 U.S. 704 (1947), 1947-2 C.B. 167.
            (D) Services rendered personally. If the services must berendered personally, presumably the person or persons forwhom the services are performed are interested in the

methods used to accomplish the work as well as in theresults. See Rev. Rul. 55-695, 1955-2 C.B. 410.
            (E) Hiring, supervising, and paying assistants. If the personor persons for whom the services are performed hire,supervise, and pay assistants, that factor generally showscontrol over the workers on the job. However, if one (1)worker hires, supervises, and pays the other assistants undera contract under which the worker agrees to providematerials and labor and under which the worker isresponsible only for the attainment of a result, this factorindicates an independent contractor status. Compare Rev.Rul. 63-115, 1963-1 C.B. 178, with Rev. Rul. 55-593 1955-2C.B. 610.
            (F) Continuing relationship. A continuing relationshipbetween the worker and the person or persons for whom theservices are performed indicates that an employer-employeerelationship exists. A continuing relationship may existwhere work is performed at frequently recurring althoughirregular intervals. See United States v. Silk.
            (G) Set hours of work. The establishment of set hours ofwork by the person or persons for whom the services areperformed is a factor indicating control. See Rev. Rul.73-591, 1973-2 C.B. 337.
            (H) Full time required. If the worker must devotesubstantially full time to the business of the person orpersons for whom the services are performed, such person orpersons have control over the amount of time the workerspends working and impliedly restrict the worker from doingother gainful work. An independent contractor on the otherhand, is free to work when and for whom he or she chooses.See Rev. Rul. 56-694, 1956-2 C.B. 694.
            (I) Doing work on employer's premises. If the work isperformed on the premises of the person or persons forwhom the services are performed, that factor suggestscontrol over the worker, especially if the work could be doneelsewhere. Rev. Rul. 56-660, 1956-2 C.B. 693. Work doneoff the premises of the person or persons receiving theservices, such as at the office of the worker, indicates somefreedom from control. However, this fact by itself does notmean that the worker is not an employee. The importance ofthis factor depends on the nature of the service involved andthe extent to which an employer generally would require thatemployees perform such services on the employer'spremises. Control over the place of work is indicated whenthe person or persons for whom the services are performedhave the right to compel the worker to travel a designatedroute, to canvass a territory within a certain time, or to workat specific places as required. See Rev. Rul. 56-694.
            (J) Order of sequence set. If a worker must perform servicesin the order or sequence set by the person or persons for

whom the services are performed, that factor shows that theworker is not free to follow the worker's own pattern of workbut must follow the established routines and schedules of theperson or persons for whom the services are performed.Often, because of the nature of an occupation, the person orpersons for whom the services are performed do not set theorder of the services or set the order infrequently. It issufficient to show control, however, if such person orpersons retain the right to do so. See Rev. Rul. 56-694.
            (K) Oral or written reports. A requirement that the workersubmit regular or written reports to the person or persons forwhom the services are performed indicates a degree ofcontrol. See Rev. Rul. 70-309, 1970-1 C.B. 199, and Rev.Rul. 68-248, 1968-1 C.B. 431.
            (L) Payment by hour, week, month. Payment by the hour,week, or month generally points to an employer-employeerelationship, if this method of payment is not just aconvenient way of paying a lump sum agreed upon as thecost of a job. Payment made by the job or on a straightcommission generally indicates that the worker is anindependent contractor. See Rev. Rul. 74-389, 1974-2 C.B.330.
            (M) Payment of business and traveling expenses. If theperson or persons for whom the services are performedordinarily pay the worker's business or traveling expenses orbusiness and traveling expenses, the worker is ordinarily anemployee. An employer, to be able to control expenses,generally retains the right to regulate and direct the worker'sbusiness activities. See Rev. Rul. 55-144, 1955-1 C.B. 483.
            (N) Furnishing of tools and materials. The fact that theperson or persons for whom the services are performedfurnish significant tools, materials, and other equipmenttends to show the existence of an employer-employeerelationship. See Rev. Rul. 71-524, 1971-2 C.B. 346.
            (O) Significant investment. If the worker invests in facilitiesthat are used by the worker in performing services and arenot typically maintained by employees (such as themaintenance of an office rented at fair value from anunrelated party), that factor tends to indicate that the workeris an independent contractor. On the other hand, lack ofinvestment in facilities indicates dependence on the personor persons for whom the services are performed for suchfacilities and, accordingly, the existence of anemployer-employee relationship. See Rev. Rul. 71-524.Special scrutiny is required with respect to certain types offacilities, such as home offices.
            (P) Realization of profit or loss. A worker who can realize aprofit or suffer a loss as a result of the worker's services (inaddition to the profit or loss ordinarily realized byemployees) is generally an independent contractor, but the

worker who cannot is an employee. See Rev. Rul. 70-309.For example, if the worker is subject to a real risk ofeconomic loss due to significant investments or a bona fideliability for expenses, such as salary payments to unrelatedemployees, that factor indicates that the worker is anindependent contractor. The risk that a worker will notreceive payment for his or her services, however, is commonto both independent contractors and employees and thusdoes not constitute a sufficient economic risk to supporttreatment as an independent contractor.
            (Q) Working for more than one (1) firm at a time. If aworker performs more than de minimis services for amultiple of unrelated persons or firms at the same time, thatfactor generally indicates that the worker is an independentcontractor. See Rev. Rul. 70-572, 1970-2 C.B. 221.However, a worker who performs services for more than one(1) person may be an employee of each of the persons,especially where such persons are part of the same servicearrangement.
            (R) Making service available to general public. The fact thata worker makes his or her services available to the generalpublic on a regular and consistent basis indicates anindependent contractor relationship. See Rev. Rul. 56-660.
            (S) Right to discharge. The right to discharge a worker is afactor indicating that the worker is an employee and theperson possessing the right is an employer. An employerexercises control through the threat of dismissal, whichcauses the worker to obey the employer's instructions. Anindependent contractor, on the other hand, cannot be fired solong as the independent contractor produces a result thatmeets the contract specifications. Rev. Rul. 75-41, 1975-1C.B. 323.
            (T) Right to terminate. If the worker has the right to end hisor her relationship with the person for whom the services areperformed at any time he or she wishes without incurringliability, that factor indicates an employer-employeerelationship. See Rev. Rul. 70-309.
            (U) Any other guidelines under IC 22-3-6-1(b) andIC 22-3-7-9(b)(5).
As added by P.L.110-2010, SEC.22.

IC 22-2-15-4
Presentation to pension management oversight commission
    Sec. 4. The department shall make a presentation to the pensionmanagement oversight commission not later than October 1, 2010,outlining the proposed guidelines and procedures.
As added by P.L.110-2010, SEC.22.

IC 22-2-15-5
Recommendations to legislative council    Sec. 5. The department shall before November 1, 2010, makerecommendations in an electronic format under IC 5-14-6 to thelegislative council concerning any legislative changes needed toimplement the guidelines and procedures developed under thischapter, including a budgetary recommendation for theimplementation of the guidelines and procedures and a fundingmechanism, to the extent possible, which must include a fee.
As added by P.L.110-2010, SEC.22.

IC 22-2-15-6
Rule adoption and implementation
    Sec. 6. After considering any recommendations by the pensionmanagement oversight commission, the department shall convert theguidelines and procedures to rules by adopting rules under IC 4-22-2before August 1, 2011. The department shall implement the rulesbefore August 1, 2011.
As added by P.L.110-2010, SEC.22.