Employee or Independent Contractor?

Is a home tutor an employee or independent contractor? 

young woman tutoring little girl in office
Photo by Gustavo Fring on Pexels.com

From The San Diego Tribune, Dan Eaton discusses whether a home tutor is an employee or independent contractor under California’s ABC test. Dan writes:

Under AB 5, any worker performing compensated service for someone else is presumed to be an employee unless the hirer can meet all three parts of the “ABC” test. Part A requires that the worker be free from the control of the hirer in performing the work. Part B requires that the worker perform work that is “outside the usual course of the hiring entity’s business.” Part C requires that the worker be “customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

Parents who relinquish control over the manner in which the tutoring is done would satisfy Part A. But, as suggested by the inclusion of tutors in the list of household occupations in the applicable wage order, a tutor’s work may be considered among the household’s core functions, Part B.

A parent may be unable to satisfy Part C, particularly if the tutor has no other clients. Merely allowing the tutor to have other clients is insufficient. Nor is Part C satisfied if the tutor has a day job that is not “of the same nature” as tutoring. And limiting the tutor to a handful of hours per week doesn’t make the tutor an independent contractor; it may simply make her the parents’ part-time employee.

More to the point, while AB 5 does not explicitly extend the ABC test to the treatment of workers under the state’s tax code, the California Franchise Tax Board takes the position that “The determination of whether a worker is an employee or independent contractor under AB 5 is relevant for California income tax purposes.”

Complicating matters further, the IRS Household Employer’s Tax Guide does not treat a tutor as a household employee, even when the tutoring is done in the home.

The analysis is different if a tutor is obtained through a referral agency, but the outcome may be the same. Under AB 5, a more flexible independent contractor test — not the strict ABC test — applies where a referral agency connects tutors to clients. The tutor must, among other things, set his or her own rates and be free to work with other clients, including through competing referral agencies.

Beyond these requirements, the term “tutor” for purposes of the referral agency exception includes only a “person who develops and teaches their own curriculum. A ‘tutor’ does not include a person who teaches a curriculum created by a public school. …” The exception also does not apply “to an individual worker, as opposed to a business entity [such as a sole proprietor], who performs services for a client through a referral agency.” A tutor who is an individual worker and provides services through a referral agency is treated as the referral agency’s employee. That’s not the referral agency’s problem alone. A parent may be treated as the dual employer of a tutor misclassified as an independent contractor.

It turns out the answer to the question presented is not as easy as ABC.

Read the full story at Is a home tutor an employee or independent contractor? – The San Diego Union-Tribune

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