[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3306(i)-1]

[Page 181-182]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
  Subpart D_Federal Unemployment Tax Act (Chapter 23, Internal Revenue 
                              Code of 1954)
 
Sec. 31.3306(i)-1  Who are employees.

    (a) Every individual is an employee if the relationship between him 
and the person for whom he performs services is the legal relationship 
of employer and employee. (The word ``employer'' as used in this section 
only, notwithstanding the provisions of Sec. 31.3306(a)-1, includes a 
person who employs one or more employees.)
    (b) Generally such relationship exists when the person for whom 
services are performed has the right to control and direct the 
individual who performs the services, not only as to the result to be 
accomplished by the work but also as to the details and means by which 
that result is accomplished. That is, an employee is subject to the will 
and control of the employer not only as to what shall be done but how it 
shall be done. In this connection, it is not necessary that the employer 
actually direct or control the manner in which the services are 
performed; it is sufficient if he has the right to do so. The right to 
discharge is also an important factor indicating that the person 
possessing that right is an employer. Other factors characteristic of an 
employer, but not necessarily present in every case, are the furnishing 
of tools and the furnishing of a place to work, to the individual who 
performs the services. In general, if an individual is subject to the 
control or direction of

[[Page 182]]

another merely as to the result to be accomplished by the work and not 
as to the means and methods for accomplishing the result, he is an 
independent contractor. An individual performing services as an 
independent contractor is not as to such services an employee. 
Individuals such as physicians, lawyers, dentists, veterinarians, 
construction contractors, public stenographers, and auctioneers, engaged 
in the pursuit of an independent trade, business, or profession, in 
which they offer their services to the public, are independent 
contractors and not employees.
    (c) Whether the relationship of employer and employee exists will in 
doubtful cases be determined upon an examination of the particular facts 
of each case.
    (d) If the relationship of employer and employee exists, the 
designation or description of the relationship by the parties as 
anything other than that of employer and employee is immaterial. Thus, 
if such relationship exists, it is of no consequence that the employee 
is designated as a partner, coadventurer, agent, independent contractor, 
or the like.
    (e) All classes or grades of employees are included within the 
relationship of employer and employee. Thus, superintendents, managers, 
and other supervisory personnel are employees. Generally, an officer of 
a corporation is an employee of the corporation. However, an officer of 
a corporation who as such does not perform any services or performs only 
minor services and who neither receives nor is entitled to receive, 
directly or indirectly, any remuneration is considered not to be an 
employee of the corporation. A director of a corporation in his capacity 
as such is not an employee of the corporation.
    (f) Although an individual may be an employee under this section, 
his services may be of such a nature, or performed under such 
circumstances, as not to constitute employment (see Sec. 31.3306(c)-2).