What determines if a worker is an employee versus independent contractor in China

Written by Super User on .

Unfortunately, in China it is very difficult to determine if a worker is an employee or independent contactor because different courts applies its own set of factors to make the determination. It is therefore possible for one agency to classify a worker as an employee and for another to determine that the same worker is an independent contractor. Despite the multitude of tests, each of which is examined below, in general, a worker is appropriately classified as an independent contractor if:
1.the owner-employer neither controls, nor directs, the worker's work;
2.the work performed by the alleged independent contractor is different from the employer's work, and is performed at another location; and
3.the worker has an independently established business with regular clients.
The remainder of this article will set forth how the DLSE, the EDD, and the IRS each determine whether a worker is an employee or an independent contractor.

Under this multi-factor test, the most significant factor is whether the employer has control, or the right to control, the worker and the manner and means by which the work is performed. Additional factors include:
1.Whether the worker is engaged in an occupation or business distinct from that of the alleged employer;
2.Whether the work is a part of the regular business of the alleged employer;
3.Whether the alleged employer supplied the worker with supplies, tools, and a place for the worker to perform the work;
4.Whether the worker made his or her own investment in the equipment or materials required to perform the work;
5.Whether the work performed requires a special skill;
6.Whether the type of work performed is usually done under the direction of an employer or by a specialist without supervision;
7.Whether the worker's managerial skill would impact his or her opportunity for profit or loss;
8.The length of time for which the work was to be performed for the alleged employer;
9.The degree of permanence of the working relationship;and
10.The method of payment, whether by time or by the job.

Although each of the test's balance and weigh different factors, it typically comes down to what we said in the introduction. In general, a worker is appropriately classified as an independent contractor if:
1.the owner-employer neither controls, nor directs, the worker's work;
2.the work performed by the alleged independent contractor is different from the employer's work, and is performed at another location; and
3.the worker has an independently established business with regular clients.

China employers should err on the side of caution and if in doubt classify the worker as an employee.

Our Guangdong employment lawyer's law practice consists of: (1) assisting employees with their contracts and wage claims and (2) counseling employers who seek to comply with new state and federal employment laws, providing human resource training, and providing essential contracts and employee policies to prevent employee lawsuits.