If an employer has the right to control the worker's work - how and what he does, the worker is an employee. If not, generally, the worker is an independent contractor. The employer's tax treatment of each is different and the workers have different tax rules that apply to them. For example, a contractor can deduct her business expenses against her business income while an employee must treat them as miscellaneous itemized deductions only deductible to the extent that category of deductions exceeds 2% of AGI.
This website, created and maintained by Professor Annette Nellen, includes links to information from the IRS and other government agencies on worker classification matters. There are also links to legislative proposals to improve the worker classification rules.
Legislative Proposals and Hearings
This web page contains the following major sections. I regret that the WebsiteBuilder tool does not allow me to insert links to the individual sections.
21st Century Taxation