Fundamental Payroll Certification (FPC) 2025 – 400 Free Practice Questions to Pass the Exam

The Common Law Test is designed to assess the degree of control an employer has over a worker to determine how that worker should be classified—either as an employee or an independent contractor. This test emphasizes the relationship between the worker and the employer, focusing on aspects such as behavioral control, financial control, and the type of relationship between the parties.

Under this test, several factors are considered: whether the employer has the right to direct or control the work performed, whether the worker has a significant investment in equipment or materials, if the worker has opportunities for profit or loss, and how much the worker is integrated into the employer's business. A higher level of control typically signifies an employee relationship, while more independence suggests independent contractor status.

The other tests mentioned, such as the Reasonable Basis Test, ABC Test, and Hybrid Test, have different criteria and purposes. For example, the ABC Test is more stringent and is used by some states to classify workers primarily in the context of unemployment insurance and worker's compensation. The focus on control in the Common Law Test, however, is pivotal for establishing the fundamental distinction between employee and independent contractor status.