It's our perception that most of the time, employees are improperly classified as Independent Contractors - and the IRS is certainly cognizant of that fact.
But when an Independent Contractor is properly classified, it is a boon to the employer - especially when that person tries to sue their employer for improper termination, discrimination, etc. - because they are not actually an employee
In California's Varisco v. Gateway Science and Engineering, Inc., the 2nd Appellate Court ruled that an Independent Contractor was properly classified, and thus threw out Varisco's wrongful termination claim.
Control is the principal factor in determining whether an individual worker is an employee or an independent contractor. “An independent contractor is ‘one who renders service in the course of an independent employment or occupation, following his employer's desires only in the results of the work, and not the means whereby it is to be accomplished,’” wrote the court, quoting prior cases.
There are numerous secondary factors in determining an Independent Contractor status, very well outlined by Chris Olmstead of Barker Olmsted & Barnier.