Economic Reality Test

Definition

Federal test examining economic dependence to determine worker classification, considering multiple factors.

Related Terms

Self-employed worker who provides services to clients without being an employee, responsible for their own taxes and benefits.

ABC Test

Employment classification test determining if a worker is an independent contractor based on control, business, and custom criteria.

FAQs

What factors does the economic reality test consider?

Control, profit/loss opportunity, investment, skill required, permanence, and integration.

Similar Terms

NDA (Non-Disclosure Agreement)

Legal agreement preventing sharing of confidential information about a client's business.

Contract

Legal agreement outlining project terms, payment, deliverables, and responsibilities.

LLC (Limited Liability Company)

Business structure providing personal liability protection while maintaining tax flexibility.

Sole Proprietor

Simplest business structure where individual and business are legally the same entity.

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Last updated: January 18, 2026

Reviewed by GigFinance Team, Gig Economy & Finance Experts

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