General Memo 604


Incorrectly classifying employees as Independent Contractors

October 15, 2010

To ensure that IMRF employers are correctly implementing IMRF statutes, policies, and procedures, IMRF conducts Employer Audits.

During an Employer Audit, IMRF’s internal auditors perform procedures designed to determine the employer’s compliance with statutory reporting requirements relating to employee enrollment, earnings, and service. One of the frequent exceptions the auditors are finding is employees incorrectly classified as independent contractors.

Independent contractors

Employers attempting to avoid IMRF contributions by incorrectly classifying employees as independent contractors are assessed retroactive contributions on the compensation paid to the incorrectly classified employee.

We caution you to examine carefully the classification of anyone who works your IMRF hourly standard (600 or 1000 hours annually) and is not treated as an IMRF participating employee.

An employer cannot simply designate as an independent contractor a person performing services for the employer. Even though the worker agrees to be called an independent contractor and the employer and worker enter into a contract, unless a very specific set of criteria are satisfied, the worker remains an employee. It is the actual facts of the relationship that control the worker’s status, not the name given or the provisions of a written agreement.


A person is most likely an employee and not an independent contractor if:

Upon request, the IRS will verify a worker’s status as an independent contractor. IMRF recommends that employers file IRS Form SS-8 for any worker classified as an independent contractor, who will spend a significant amount of time performing services for you.

The IRS will then make an official determination regarding the position. You can download IRS Form SS-8 at or contact the IRS at 1-800-829-1040 for more information about filing this form or the determination process.


Louis W. Kosiba
IMRF Executive Director

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