Blog · Cleaning · October 23, 2026 · 19 min read

W-2 or 1099 for Cleaners? Employee vs Contractor Rules by State

W-2 or 1099 for your cleaners? The answer is decided one cleaner at a time, so a single crew can have both. A cleaner who runs a cleaning business of their own, with other customers and their own prices, can be a contractor. A cleaner on your weekly route who works your checklist with your products looks like an employee under every test in this guide. Across the 50 states and DC, 15 unemployment agencies use an ABC test that presumes a cleaner is your employee, and 35 require workers' comp from the first hire. This guide has the rule for every state with the official source, what payroll adds compared with a 1099, and how cleaning companies move cleaners onto payroll as they grow.

Many of the cleaning business owners we have talked to while building EosLog run a mix: several cleaners paid on 1099 and one or two on payroll. It is easy to see how a crew gets there. A 1099 is simple when the first help you bring in is someone you call when the schedule overflows, and payroll takes setting up.

The part that catches owners out is that the label is not theirs to choose. The IRS, the Department of Labor and your state each decide whether a worker is an employee by looking at how the work actually runs, cleaner by cleaner. Someone who cleans your customers' homes every week, on your schedule and your way, looks like an employee to all of them, while an independent cleaner you call for overflow work may not.

The state rules differ more than the federal ones, so this guide puts them on one page: a row for each state and DC with the test its unemployment law uses, when workers' comp becomes required, the new employer unemployment tax rate and wage base for 2026, and any misclassification penalty or rule aimed at cleaning businesses. Each row comes from the state's own unemployment, labor or workers' comp pages, read in October 2026. Where no official page we found settled a question, the row says Unclear instead of guessing.

The short answer

It is decided cleaner by cleaner. The IRS weighs who controls the work, who carries the money risk and how the relationship works. When your company books the job, sets the time, trains the cleaner, supplies the products and pays by the hour, all three point to employee. When the cleaner runs their own business, sets their own price for the job and brings their own supplies, they point the other way.

Many states start from "employee". 15 of the 51 jurisdictions in the table use an ABC test for unemployment tax: the cleaner is your employee unless you prove all three parts, and part B asks whether the work is outside the usual course of your business. Cleaning is the usual course of a cleaning company's business. 8 more ask for freedom from your control plus a real independent business, 22 use a common-law control test like the IRS's, and 6 have a test of their own.

Workers' comp is a separate rule. 35 jurisdictions require it from the first employee. Alabama, Mississippi, Missouri and Tennessee start at five employees, Florida and South Carolina at four, and Arkansas, Georgia, Michigan, New Mexico, North Carolina, Virginia and Wisconsin at three. Two of those also reach smaller employers: Michigan once one employee has worked 35 or more hours a week for 13 weeks, and Wisconsin once you pay $500 in wages in a calendar quarter, so in Wisconsin even one regular cleaner needs coverage. Kansas starts once yearly payroll is over $20,000. Texas and South Dakota do not require it, though an employer without it gives up protection if an injured worker sues.

You do not have to change everyone at once. The cleaners who look most like employees are usually the regulars on your route, and they are where the risk sits. A sensible order is to move them to payroll first, keep the cleaners who really run their own businesses on 1099, and add payroll as you grow. The sections on running a mixed crew and moving cleaners to payroll as you grow walk through it.

Map, state picker and cost estimate

Switch the map between the unemployment test and workers' comp, then tap a state. The card shows the test, when comp starts, any misclassification penalty or rule for cleaning businesses, and the official sources. Picking a state also fills in its new employer unemployment rate and wage base in the cost estimate, where you can add your own pay rate, hours and workers' comp rate.

ABC test
Control and own-business test
Common-law control test
State's own test
Unclear

From the first employee
At a set number of employees
Not required
Unclear

Tap a state to see its rules and official sources. The map shows what each state's own pages say, not legal advice. "Unclear" means no official page we found settled it.

Jump to a state: Alabama · Alaska · Arizona · Arkansas · California · Colorado · Connecticut · Delaware · Florida · Georgia · Hawaii · Idaho · Illinois · Indiana · Iowa · Kansas · Kentucky · Louisiana · Maine · Maryland · Massachusetts · Michigan · Minnesota · Mississippi · Missouri · Montana · Nebraska · Nevada · New Hampshire · New Jersey · New Mexico · New York · North Carolina · North Dakota · Ohio · Oklahoma · Oregon · Pennsylvania · Rhode Island · South Carolina · South Dakota · Tennessee · Texas · Utah · Vermont · Virginia · Washington · Washington, DC · West Virginia · Wisconsin · Wyoming

The three tests that decide it

The IRS: control, money and the relationship. For federal payroll taxes the IRS uses the common-law rules and groups the evidence into three categories: behavioral control (do you control what the worker does and how), financial control (who pays expenses, supplies the tools and can make or lose money) and the type of relationship (written contracts, benefits, whether the work is ongoing and part of your regular business). No single fact decides it. If you are unsure, Form SS-8 asks the IRS to decide for a specific worker.

The Department of Labor: economic reality. For minimum wage and overtime under the Fair Labor Standards Act, the question is whether the worker is economically dependent on you or in business for themselves. The Department's 2024 rule, in 29 CFR Part 795, is the regulation on the books and still applies in private lawsuits. In May 2025 the Wage and Hour Division said it would no longer apply that rule's analysis in its own investigations, and on February 26, 2026 the Department proposed replacing it. As of this guide's check date there is no final rule. Both versions look at the same core facts: control, the chance of profit or loss, and whether the worker runs an independent business.

Your state: unemployment, workers' comp and wage law. Each state's unemployment agency decides whether you owe state unemployment tax on a worker, and that is the test in the table below. Some states use the same test for every law. Maine and West Virginia each set one standard for unemployment, workers' comp and wage law, and Oregon uses one definition for its Employment Department, Department of Revenue and Workers' Compensation Division. Others split them. California's ABC test covers unemployment and most wage law, Massachusetts, New Jersey and Illinois use three-part tests in their wage laws too, and Tennessee switched its unemployment test from the ABC test to the IRS factors for work done on or after January 1, 2020.

Because the tests differ, a worker can be an employee under one and not another. Vermont's Department of Labor says so directly: a worker can be an employee under Vermont law and not under the IRS test. If the state test is stricter, the state test is the one an audit will use.

Why the ABC test is hard for a cleaning company to pass

Under an ABC test the worker is your employee unless you show all three of these:

A: the worker is free from your control and direction, in the contract and in fact.
B: the work is outside the usual course of your business, or in many states, outside all of your places of business.
C: the worker is customarily engaged in an independent business of the same kind.

Parts A and C can go either way depending on how you work together. Part B is the problem. A cleaning company sells cleaning, so a cleaner who cleans for its customers is doing the usual course of its business by definition.

The wording of part B matters. California's unemployment test and Indiana's have only the usual-course option. So does the Massachusetts wage law, even though its unemployment test has both. Alaska, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, and Vermont also accept work performed outside all of your places of business. Whether a customer's home counts as one of your places of business is for the state agency to decide, and this guide does not answer it.

Louisiana uses ABC wording, but since 2021 it also presumes a worker is a contractor if the worker controls how the work is done and meets six of eleven listed criteria. Washington lets a business rebut its presumption with an ABC test or with a six-part test that requires the worker to have a registered business of their own.

Ten-question check

Tick each statement that is true for one of your cleaners. Questions 1 to 9 follow the IRS's three categories, and question 10 is the ABC test's part B. The check counts and explains, it does not decide. A pattern of ticks is what an agency would see, so if most of them are ticked, plan on W-2.

Running a mixed crew

A crew with some cleaners on payroll and some on 1099 is allowed. The IRS tells businesses to examine the relationship between the worker and the business, and the state tests in this guide work the same way, one relationship at a time. A regular on your weekly route and an independent cleaner you call for move-out jobs can be treated differently when the work really is different.

A mix gets harder to defend when cleaners on payroll and cleaners on 1099 do the same work the same way: the same homes, the same checklist and the same supplies, at an hourly rate you set. If one of them is your employee, it is hard to argue the one beside them is not. The IRS builds that into its own relief rule.

Where common practice counts, and where it does not

Federal law does give some weight to how your industry works. Section 530 of the Revenue Act of 1978 can relieve a business of federal employment taxes on workers it treated as contractors. To qualify, the business must have filed the required Forms 1099 for them, treated every worker in a substantially similar position the same way, and had a reasonable basis for it. One reasonable basis the IRS accepts is that you knew, and can show, that a significant segment of your industry treated similar workers as contractors. The IRS manual counts 25 percent of the industry as a significant segment, and it treats an industry as the businesses in your area that sell the same service.

Two limits matter for a mixed crew. The first is consistency. The IRS says a business that treated "any worker holding a substantially similar position" as an employee is not eligible, so a W-2 cleaner and a 1099 cleaner on the same route work against each other. The second is scope. Section 530 is relief from federal employment taxes only. Your state applies its own test, shown in the table, and Section 530 is not part of it.

Check each cleaner, not the crew

Run the ten-question check once for each cleaner and sort the crew into two groups: the regulars whose answers look like an employee's, and the cleaners who run a business of their own. The first group is where moving to payroll does the most good. For the second group, make sure the paperwork matches how the work runs.

Paperwork for the cleaners who stay on 1099

A Form W-9 before the first payment. The IRS calls it the first step with a new contractor.
A Form 1099-NEC each January for anyone you paid $2,000 or more. That threshold applies to payments made in 2026 and later. It was $600 before.
Their quote or invoice for each job, at a price they set, rather than hours on your timesheet.
A certificate of insurance for their liability coverage and their workers' comp, or their state exemption. Missouri's labor department explains why: if a subcontractor is uninsured, the hiring business can become liable for the subcontractor's injuries, and its comp insurer will charge premium for that subcontractor. In a June 2025 Oregon final order, a janitorial company's premium audit correctly included its payments to cleaning subcontractors, because under Oregon's test they were workers it had to cover.
Any form your state uses for contractors, such as Montana's Independent Contractor Exemption Certificate or Rhode Island's DWC 11-IC.

What tends to start a review

State agencies describe how their reviews start. The Texas Workforce Commission says its audits generally begin in one of four ways, and the first is a former worker filing an unemployment claim on wages the employer never reported. It gives those audits the highest priority, and lists a report from a competitor or someone else as another way in. Oregon's Employment Department calls a former worker's claim on unreported wages a common reason for an audit. Wyoming lists wage protests on unemployment and workers' comp claims among its reasons, along with random selection and anonymous tips.

Put plainly, the label tends to get tested when a cleaner leaves and files for unemployment or gets hurt on a job. Those are the moments to plan for, and they are another reason to start with your regulars.

When a 1099 can fit

The tests do not ban contractors. They describe what a real one looks like. A cleaner or a cleaning company you hire is more likely to be a contractor when they:

have their own customers and advertise to the public, so you are one client of several;
quote you a price for the job and can make or lose money on it;
bring their own products and equipment and carry their own insurance;
decide how and when the work gets done, and can send someone else;
do work your company does not sell, such as carpet, window or pressure washing work if you only sell house cleaning.

The last point is the ABC test's part B again. Subcontracting the same cleaning you sell to another business can still fail it in a strict ABC state. Some states add formal steps: Montana expects a contractor to hold an Independent Contractor Exemption Certificate or their own workers' comp coverage, Rhode Island's comp law expects the contractor to file a DWC 11-IC form with each business, and West Virginia requires a written contractor agreement with specific acknowledgments.

Moving cleaners to payroll as you grow

There is no single right order, and you do not have to move every cleaner on the same day. The classification question changes at a few points as a cleaning business grows. Here are those points and what tends to fit each one.

Just you, plus help when it gets busy

When the help is another cleaner who runs their own business, takes your overflow jobs at a price they quote and brings their own supplies, a 1099 can fit. Use the paperwork list in running a mixed crew. In an ABC state, prong B can still count against you because they do the same cleaning you sell, so check your row in the table.

The first regular

The question changes when someone becomes part of your schedule: the same homes every week, your checklist, your products and an hourly rate you set. Every test in this guide reads that as employment, and it is the natural point to run your first payroll. That first employee can be part-time. The Department of Labor says the Fair Labor Standards Act does not define full-time or part-time work, and overtime starts only after 40 hours in a workweek. In the worked example below, one cleaner at 25 hours a week in Texas adds about $2,000 a year in taxes, before workers' comp.

A mixed crew

Regulars on payroll, plus independent cleaners or cleaning companies for overflow and for work you do not sell yourself, such as carpet or window cleaning. This holds up best when the two groups really do different work, or the same work in a genuinely different way, for the consistency reason in running a mixed crew.

Moving the rest over

If some regulars are still on 1099, you can move them one at a time from a set date, starting with the cleaners whose check results look most like an employee's. Moving someone going forward does not settle past years, which is what the IRS settlement program in if your cleaners are on 1099 today is for. If you use that program, the IRS requires every worker in the same class to be treated as an employee, so decide which cleaners belong in the class before you file.

A bigger team

The federal rule that can charge employers for not offering health coverage comes much later: it applies once you average 50 or more full-time employees, counting full-time equivalents. Hawaii is the exception to plan for: its Prepaid Health Care Act requires employers to provide health coverage to employees who work at least 20 hours a week and earn at least 86.67 times the state minimum wage in a month, starting after four consecutive weeks of employment. If you would rather not run payroll yourself, a payroll service can handle the filings, and an IRS-certified professional employer organization (CPEO) can take over some or all of your federal employment tax responsibilities under a contract.

What payroll costs, worked out

Employing a cleaner adds four costs on top of pay: Social Security and Medicare, federal unemployment tax, state unemployment tax and workers' comp. For 2026 the employer pays 6.2 percent Social Security on wages up to $184,500 and 1.45 percent Medicare on all wages. Federal unemployment tax is 6.0 percent of the first $7,000, cut to 0.6 percent when you get the full 5.4 percent credit for paying state unemployment tax, which is $42 a worker per year. In a credit reduction state the credit is smaller; for 2025 those were California and the US Virgin Islands.

Example: a cleaner paid $18 an hour for 25 hours a week, 50 weeks a year, earns $22,500. Here is what the employer adds in three states, using each state's 2026 new employer rate and wage base from the table:

Employer cost	Texas	Pennsylvania	Hawaii
Social Security, 6.2 percent	$1,395.00	$1,395.00	$1,395.00
Medicare, 1.45 percent	$326.25	$326.25	$326.25
Federal unemployment	$42.00	$42.00	$42.00
State unemployment	$243.00 (2.7 percent of $9,000)	$382.20 (3.822 percent of $10,000)	$542.25 (2.41 percent of $22,500)
Total on top of pay	$2,006.25	$2,145.45	$2,305.50
Per hour worked	$1.61	$1.72	$1.84

Hawaii's line is the largest even though its rate is lower than Pennsylvania's, because its wage base is $64,500, so the tax applies to all $22,500 of pay. Each line is figured per cleaner, so a crew is a straight multiple. Example: moving four Texas regulars paid like this onto payroll adds $8,025 a year in taxes. Workers' comp comes on top of these numbers. Carriers price it per $100 of payroll by job class, so get a quote for janitorial work and put it in the estimate above.

Build the result into your price. If your cleaning rates were set when you did every job yourself, a crew hour now costs the wage plus these taxes plus comp, and the cleaning profit calculator shows what is left per job once labor is counted.

Hiring your first W-2 cleaner: the paperwork

Get an EIN from the IRS if you do not have one. You need it for payroll filings.
Register with your state for unemployment tax and, in states with an income tax, withholding. The unemployment agency in the table is where the first account comes from.
Buy workers' comp before the first day if your state requires it at one employee. In North Dakota the state fund is the only insurer, Wyoming requires coverage through its state fund for the industries on its list, which include services to buildings and dwellings, and in Ohio and Washington coverage comes from the state fund unless you qualify to self-insure.
Collect Form W-4 for federal withholding, plus your state's form if it has one.
Complete Form I-9. The employee fills in section 1 by the first day of work and you complete section 2 within three business days.
Report the new hire to your state's new hire registry. Many states allow 20 days, and some allow less: Alabama and Maine want it within 7 days, Georgia and Vermont within 10.
Run payroll and file. Deposit withheld and employer taxes, file Form 941 each quarter and Form 940 each year, and give each employee a W-2 by January 31.

Once a cleaner is on payroll, the hours you track become pay records, so keep them where you can find them. The free templates include job checklists and sign-off sheets you can hand a new cleaner on day one.

If your cleaners are on 1099 today

You have more than one option here, and you can mix them cleaner by cleaner. A cleaner who really runs their own business can stay on 1099 once the paperwork matches how the work runs (see running a mixed crew). A regular who works like an employee can move to payroll from a set date. Moving someone going forward does not settle past years, though. Two federal options deal with those.

The Voluntary Classification Settlement Program. The IRS lets a business that has treated workers as contractors reclassify them as employees going forward and pay a reduced amount for past federal employment taxes, by filing Form 8952. The payment is 10 percent of the employment tax that would have been due for the most recent tax year, figured at reduced rates. To qualify you must have treated those workers as contractors consistently, filed their Forms 1099 for the previous three years, and not be under an IRS employment tax audit or a Department of Labor or state classification audit. File Form 8952 at least 120 days before you start treating them as employees.

Form SS-8. If you are unsure about one worker, the IRS will make a determination.

State programs. Check whether your state has one. Louisiana's Voluntary Disclosure Program, for example, lets a business pay the unemployment taxes and penalties it owes for workers it did not classify as employees, confidentially and with no interest, as long as it is not already under a classification audit.

The federal options do not bind your state. State unemployment agencies run their own audits under their own tests, and several states in the table add their own penalties: Maine's fines run $2,000 to $10,000 per violation, Virginia's up to $1,000 per misclassified worker for a first offense, Colorado's up to $5,000 per worker for a first willful violation, and California's $5,000 to $25,000 per violation for willful misclassification.

All 51 jurisdictions, with sources

Last checked: October 23, 2026. Each row links to the official pages it rests on. A rate shown as "see note" means there is no single new employer rate to show, and the note says why: most of those states set the rate by industry or as a range. If you spot a row that is out of date, tell us and we will recheck it against the state's page.

State	Unemployment test	Workers' comp	What the sources say
Alabama	Common-law control test	At 5 or more employees	The Alabama Department of Labor says a worker is an employee when the business has the right of control, whether or not it uses that right, and that Alabama law uses the common law factors to decide. Employers that regularly employ fewer than five employees, full-time or part-time, do not have to carry coverage. Part-time workers and corporate officers count toward the five. 2026 new employer UI rate: 2.7%, wage base: $8,000. Newly liable employers pay 2.70 percent on the first $8,000 of each employee's wages. When is an individual considered an employee? (Alabama Department of Labor) · Employer FAQ (Alabama Department of Workforce) · Workers' Compensation insurance coverage (Alabama Department of Labor) Checked October 23, 2026
Alaska	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	Under AS 23.20.525(a)(8), work is employment unless the department is shown that the worker is free from control and direction, the work is outside the usual course of the business or outside all of its places of business, and the worker is customarily engaged in an independently established business of the same nature. Each employer with one or more employees in Alaska must carry coverage unless approved to self-insure. Owners with at least a 10 percent interest do not have to cover themselves, but must cover their employees. 2026 new employer UI rate: 1%, wage base: $54,200. The 2026 new employer rate is 1.00 percent in every industry listed. Alaska also withholds 0.50 percent from employees, which is not part of the employer rate. Cleaning businesses The Division of Workers' Compensation lists "cleaning persons (non-commercial)" among the kinds of work exempt from the coverage rule, without defining non-commercial. Ask the division before relying on it. Do you have contract labor? (Alaska Department of Labor and Workforce Development) · Workers' Compensation Requirements for Employer (Alaska Division of Workers' Compensation) · Alaska Unemployment Insurance Tax Rates for New Employers, 2026 (Alaska Department of Labor and Workforce Development) Checked October 23, 2026
Arizona	Common-law control test	From the first employee	A.R.S. 23-613.01 writes a control test into the statute: an employee is subject to the direction, rule or control of the business as to both the method of the work and the result. A signed declaration of independent business status under A.R.S. 23-1601 creates a rebuttable presumption of contractor status. The Industrial Commission of Arizona says every Arizona employer must provide workers' comp coverage to employees, through an insurer or approved self-insurance. 2026 new employer UI rate: 2%, wage base: $8,000. The DES rate chart lists a 2026 new employer rate of 2.00 percent on the first $8,000. A.R.S. 23-613.01, Employee; definition (Arizona State Legislature) · A.R.S. 23-1601, Declaration of independent business status (Arizona State Legislature) · Workers' Compensation Taxes and Assessments (Industrial Commission of Arizona) · UIT-0603A Unemployment Insurance Tax Rate Chart (Arizona Department of Economic Security) Checked October 23, 2026
Arkansas	Common-law control test	At 3 or more employees	A.C.A. 11-10-210(e) decides employee status for unemployment with the twenty-factor test of the Empower Independent Contractors Act, which is the IRS test in Revenue Ruling 87-41. Act 1055 of 2019 replaced the old presumption of employment with that test, and Act 743 of 2025 restated it. The Workers' Compensation Commission says most employers with three or more employees must carry coverage, that there are exceptions to that rule, and that employers with fewer than three should check with the Commission before assuming they are exempt. 2026 new employer UI rate: 2%, wage base: $7,000. The Division of Reemployment lists a 2026 taxable wage base of $7,000 and a new employer rate of 2.0 percent, with a 0.2 percent stabilization rate on a separate line. Act 1055 of 2019 (HB 1850) (Arkansas General Assembly) · Act 743 of 2025 (SB 598) (Arkansas General Assembly) · Unemployment Insurance for Employers (Arkansas Division of Reemployment) · Basic Facts (Arkansas Workers' Compensation Commission) Checked October 23, 2026
California	ABC test Prong B: outside the usual course of business only	From the first employee	Unemployment Insurance Code 621(b) applies the ABC test, and under AB 5 the same test covers most of the Labor Code and the wage orders. Prong B has no places-of-business option: the work must be outside the usual course of the hiring entity's business. Some occupations and business-to-business arrangements use the older Borello test instead. A business with one or more employees must carry workers' comp. Going without it is a misdemeanor, and the state can issue penalties and a stop order. 2026 new employer UI rate: 3.5%, wage base: $7,000. New employers get a 3.4 percent UI rate for two to three years on the first $7,000, plus the 0.1 percent Employment Training Tax for 2026. Misclassification penalty and Cleaning businesses Labor Code 226.8 sets civil penalties of $5,000 to $25,000 per violation for willfully misclassifying an employee as an independent contractor. Janitorial employers with at least one worker who mainly works as a janitor must register with the Labor Commissioner under the Property Service Workers Protection Act, and an unregistered employer can be fined $100 a day. A business that only cleans residential dwellings does not have to register. Information Sheet: Employment (DE 231) (California Employment Development Department) · Independent contractor versus employee (California Labor Commissioner) · DWC FAQs for employers (California Division of Workers' Compensation) · Contribution Rates, Withholding Schedules, and Meals and Lodging Values (California Employment Development Department) · Janitorial Registration Frequently Asked Questions (California Labor Commissioner) Checked October 23, 2026
Colorado	Control and own-business test	From the first employee	The Department of Labor and Employment says the two main questions are whether the worker is free from control and direction and whether the worker is customarily engaged in an independent trade, occupation, profession or business. With one or more employees working in Colorado you must have workers' comp, whether they are part-time, full-time or family members. 2026 new employer UI rate: 3.05%, wage base: $30,600. For 2026 a new non-construction employer pays a 1.53 percent beginning rate plus a 0.17 percent support surcharge and a 1.35 percent solvency surcharge, 3.05 percent combined. Misclassification penalty Colorado can fine an employer that misclassifies with willful disregard of the law up to $5,000 per worker for a first offense and up to $25,000 per worker after that. Frequently Asked Questions for Employers (Colorado Department of Labor and Employment) · Workers' Compensation Insurance Requirements (Colorado Division of Workers' Compensation) · Introductory Rates (Colorado Department of Labor and Employment) · Unemployment Insurance Premiums (Colorado Department of Labor and Employment) · Worker Misclassification Reporting and Advisory Opinions (Colorado Department of Labor and Employment) Checked October 23, 2026
Connecticut	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	Connecticut's unemployment law uses the ABC test: free from direction and control under the contract and in fact, work outside the usual course of the business or outside all of its places of business, and an independently established business of the same nature. The Workers' Compensation Commission says that, with few exceptions, all Connecticut employers must carry workers' comp. 2026 new employer UI rate: 1.9%, wage base: $27,000. For 2026 the taxable wage base is $27,000 and the new employer rate is 1.9 percent. The Department also lists a 2026 fund solvency tax rate of 1.0 percent without saying how it applies to new employers. Employer Employee Relationship for CT Unemployment Taxes (Connecticut Department of Labor) · About workers' compensation insurance (Connecticut Workers' Compensation Commission) · Information on Unemployment Tax Rate for Calendar Year 2026 (Connecticut Department of Labor) Checked October 23, 2026
Delaware	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	19 Del. C. 3302 treats paid work as employment unless the worker is free from control under the contract and in fact, the work is outside the usual course of the business or outside all of its places of business, and the worker is customarily engaged in an independently established business of the same nature. Almost every employer with one or more employees must carry workers' comp, including for part-time, seasonal and temporary workers, and coverage should start before work begins. 2026 new employer UI rate: 1.11%, wage base: $14,500. The Department of Labor lists a 2026 taxable wage base of $14,500 and a new employer rate of 1.0 percent. 19 Del. C. 3401 adds a 0.11 percent training assessment for every liable employer while the base is $14,500, 1.11 percent in total. The statute raises the base to $16,500 after December 31, 2026. Delaware Code Title 19, Chapter 33 (19 Del. C. 3302) (Delaware General Assembly) · Employer Services (Delaware Department of Labor) · Which employers are legally required to carry Workers' Compensation insurance in Delaware? (Delaware Division of Industrial Affairs) · Delaware Code Title 19, Chapter 34 (19 Del. C. 3401) (Delaware General Assembly) Checked October 23, 2026
Florida	Common-law control test	At 4 or more employees	Florida reemployment tax law counts anyone who is an employee under the usual common law rules, and the Department of Revenue weighs the factors of the working relationship. Non-construction employers must carry coverage at four or more employees. Corporate officers and LLC members who own the business count toward the four. 2026 new employer UI rate: 2.7%, wage base: $7,000. From January 1, 2026 the tax applies to the first $7,000 of each employee's wages, and new employers pay 2.7 percent until they have reported for 10 quarters. Misclassification penalty The Department of Revenue says intentional misclassification of a worker is a felony. Reemployment Tax: Employee (Florida Department of Revenue) · Coverage Requirements (Florida Division of Workers' Compensation) · Reemployment Tax Rate Information (Florida Department of Revenue) Checked October 23, 2026
Georgia	Control and own-business test	At 3 or more employees	A worker is outside employment only if free from control or direction under the contract and in fact, and customarily engaged in an independently established business. A worker the IRS has found is not an employee is also excluded. Employers that regularly employ three or more people, part-time or full-time, must carry coverage. Corporate officers and LLC members count toward the three. 2026 new employer UI rate: 2.7%, wage base: $9,500. The Department of Labor says the wage base is $9,500 and new employers get a total rate of 2.70 percent. Information about Unemployment Insurance for Employers (DOL-4E) (Georgia Department of Labor) · Employers FAQs: Unemployment Insurance (Georgia Department of Labor) · Employer Pamphlet (Georgia State Board of Workers' Compensation) Checked October 23, 2026
Hawaii	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	Hawaii's unemployment law covers services unless all three ABC conditions are shown, and prong B can be met by work outside the usual course of the business or outside all of its places of business. Any employer with one or more employees, full-time or part-time, permanent or temporary, must carry coverage unless the law excludes the work. 2026 new employer UI rate: 2.41%, wage base: $64,500. The 2026 new employer rate is 2.40 percent plus a 0.01 percent Employment and Training assessment. ABC test under HRS 383-6 (Hawaii Department of Labor and Industrial Relations) · Workers' Compensation coverage (Hawaii Disability Compensation Division) · UI tax rates and wage base (Hawaii Unemployment Insurance Division) Checked October 23, 2026
Idaho	Control and own-business test	From the first employee	Idaho Code 72-1316 covers paid work unless the worker is free from control or direction and runs an independently established business. The Department of Labor says a 1099 or a written contract alone does not make someone a contractor. Employers with one or more full-time, part-time, seasonal or occasional employees must carry coverage before the employee starts. Going without it is a misdemeanor. 2026 new employer UI rate: 1%, wage base: $58,300. Idaho's 2026 standard rate, which new employers start at, is 1.000 percent on the first $58,300. Idaho Code 72-1316, Covered employment (Idaho Legislature) · Unemployment Insurance Tax Information Handbook (Idaho Department of Labor) · Facts for Employers (Idaho Industrial Commission) · Tax rate class array 2026 (Idaho Department of Labor) Checked October 23, 2026
Illinois	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	820 ILCS 405/212 covers services unless all three prongs are shown, with prong B met by work outside the usual course of the business or outside all of its places of business. The Wage Payment and Collection Act uses a similar three-part test. If an employer has one employee, even a part-time one, it must carry workers' comp. 2026 new employer UI rate: 3.45%, wage base: $14,250. For 2026 most new employers pay 3.350 percent, and new employers in NAICS sector 56 (Administrative and Support and Waste Management, which includes janitorial services) pay 3.450 percent. Both include the 0.550 percent fund building rate. 820 ILCS 405/212 (Illinois General Assembly) · Illinois Wage Payment and Collection Act (820 ILCS 115) (Illinois General Assembly) · Workers' Compensation Insurance information for employers (Illinois Workers' Compensation Commission) · EA-50, 2026 State Experience Factor and Rates (Illinois Department of Employment Security) Checked October 23, 2026
Indiana	ABC test Prong B: outside the usual course of business only	From the first employee	IC 22-4-8-1 treats paid services as employment unless all three conditions are shown, and prong B requires work outside the usual course of the business, with no places-of-business option. The statute requires every employer bound by the act to insure and sets no minimum number of employees, with exclusions for casual, farm and household employees. 2026 new employer UI rate: 2.5%, wage base: $9,500. Most new employers pay 2.5 percent for their first four calendar years, on the first $9,500 of each employee's wages. Misclassification penalty The Department of Workforce Development says misclassified workers bring unpaid taxes plus 1 percent interest a month, and intentional misclassification adds a penalty of 50 percent of the unpaid taxes. IC 22-4, Unemployment Compensation System (Indiana General Assembly) · Misclassified Worker FAQs (Indiana Department of Workforce Development) · IC 22-3, Worker's Compensation System (Indiana General Assembly) · New Employer Premium Rate (Indiana Department of Workforce Development) Checked October 23, 2026
Iowa	Common-law control test	From the first employee	Iowa Code 96.1A counts anyone who is an employee under the usual common law rules, and treats paid services as employment unless and until it is shown that the worker is free from control or direction over the work, under the contract and in fact. Iowa Code 85.1 sets no minimum headcount. 2026 new employer UI rate: 1%, wage base: $20,400. Iowa Workforce Development lists a 2026 taxable wage base of $20,400 and a new non-construction employer rate of 1.000 percent. Iowa Code 96.1A, Definitions (Iowa Legislature) · Iowa Code 85.1 (Iowa Legislature) · Unemployment Insurance Taxes (Iowa Workforce Development) Checked October 23, 2026
Kansas	Common-law control test	Over $20,000 a year in payroll	K.S.A. 44-703 counts a worker as an employee when the business keeps the right to control both the end result and the manner and means of the work, and covers anyone who is an employee under the usual common law rules. The threshold is payroll, not headcount. The workers' comp act does not apply to an employer whose total gross annual payroll was $20,000 or less in the prior year and is expected to stay at or under $20,000, not counting wages paid to family members (K.S.A. 44-505). An exempt employer can choose to be covered. 2026 new employer UI rate: 1.75%, wage base: $15,100. For 2026 the Department of Labor lists a taxable wage base of $15,100 and a new non-construction employer rate of 1.75 percent. Misclassification penalty K.S.A. 44-766 bars knowingly and intentionally misclassifying an employee as an independent contractor and sets civil penalties for it. K.S.A. 44-703, Definitions (Kansas Office of Revisor of Statutes) · K.S.A. 44-505, Application of act (Kansas Office of Revisor of Statutes) · Employer Services (Kansas Department of Labor) · K.S.A. 44-766, Misclassification of employees (Kansas Office of Revisor of Statutes) · Kansas Unemployment Insurance Trust Fund (Kansas Legislative Research Department) Checked October 23, 2026
Kentucky	Common-law control test	From the first employee	The Office of Unemployment Insurance decides whether a worker is an independent contractor under common law rules. KRS 342.630 covers any employer, other than one engaged solely in agriculture, with one or more employees in Kentucky. 2026 new employer UI rate: see note, wage base: $12,000. New employers pay at least 2.7 percent for their first three years, and more depending on the reserve ratio, so no single rate is shown. The 2026 taxable wage base is $12,000. Misclassification penalty The Office of Unemployment Insurance says that when it reclassifies workers the employer owes back taxes plus fees and penalties, and that it offers no safe harbor. Employer Guide 2026 (Kentucky Office of Unemployment Insurance) · KRS 342.630, Coverage of employers (Kentucky General Assembly) Checked October 23, 2026
Louisiana	State's own test	From the first employee	La. R.S. 23:1472 uses ABC wording, with prong B met by work outside the usual course of the business or outside all of its places of business. Since 2021, R.S. 23:1711.1 also creates a rebuttable presumption of contractor status when the worker controls how the work is done and meets at least six of eleven listed criteria. The Office of Workers' Compensation says employers must carry workers' comp or be approved to self-insure. Domestic employees are excluded. 2026 new employer UI rate: see note, wage base: $7,000. A new employer's rate is the average rate for its industry, so no single rate is shown. The 2026 wage base is $7,000. R.S. 23:1472 (Louisiana State Legislature) · R.S. 23:1711.1 (Louisiana State Legislature) · Rights and Responsibilities for Employees and Employers (Louisiana Office of Workers' Compensation) · Louisiana Unemployment Insurance Tax Rates (Louisiana Workforce Commission) Checked October 23, 2026
Maine	State's own test	From the first employee	Maine uses one standard for unemployment, workers' comp and wage and hour law. The business must prove five core criteria, including control of the work and an established independent business, plus at least three of seven more, one of which is work outside the usual course of the business. 39-A M.R.S.A. 401 requires private employers to cover all employees, with no headcount threshold. 2026 new employer UI rate: 2.54%, wage base: $12,000. The 2026 new employer rate is 2.23 percent plus a 0.14 percent CSSF rate and a 0.17 percent UPAF rate, 2.54 percent combined. Misclassification penalty 26 M.R.S.A. 591-A sets a civil fine of $2,000 to $10,000 per violation for intentionally or knowingly misclassifying an employee as an independent contractor. Employment Standard Defining Employee vs Independent Contractor (Maine Department of Labor) · Title 39-A, 401, Liability of employer (Maine Legislature) · Annual Rate Category and Employer Array, Rate Year 2026 (Maine Department of Labor) · 2026 Form ME UC-1 Instructions (Maine Department of Labor) · 26 M.R.S.A. 591-A, Employee misclassification (Maine Legislature) Checked October 23, 2026
Maryland	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	Maryland's unemployment law uses the ABC test, with prong B met by work outside the usual course of the business or outside any of its places of business. The employer must prove all three. With few exceptions, every Maryland employer with one or more employees must provide coverage. 2026 new employer UI rate: see note, wage base: $8,500. Taxable wages are the first $8,500 per employee. The new employer rate may range from 1.0 to 2.6 percent, so no single rate is shown. Misclassification penalty Maryland's Workplace Fraud Act penalizes knowing misclassification, but the Department of Labor says it applies only to construction and landscaping. UI Appeals Decisions Digest, 8-101 (Maryland Department of Labor) · Workplace Fraud Act FAQs (Maryland Department of Labor) · Q and A for Employers (Maryland Workers' Compensation Commission) · Tax Rate Information (Maryland Department of Labor) · Labor and Employment 3-909 (Maryland General Assembly) Checked October 23, 2026
Massachusetts	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	For unemployment, the work must be free from direction and control, outside the usual course of the business or outside all of its places of business, and the same kind of work the person does in an independent business. The wage law (G.L. c.149 s.148B) also uses an ABC test, and its prong B has no places-of-business option. All employers must carry workers' comp for their employees, no matter how many hours they work. Domestic service employees are the exception, covered at 16 or more hours a week. 2026 new employer UI rate: 2.476%, wage base: $15,000. New employers registered less than three years pay 2.42 percent for 2026 plus the 0.056 percent Workforce Training Fund contribution every contributory employer pays, 2.476 percent in total, and are exempt from the 2026 COVID-19 Recovery Assessment. The wage base is $15,000. Misclassification penalty The Attorney General's advisory says violations of the independent contractor law can bring civil citations or criminal charges, and workers can sue for triple damages. Unemployment requirements for independent contractors (Massachusetts Department of Unemployment Assistance) · Massachusetts law about independent contractors (Massachusetts Trial Court Law Libraries) · Who is covered by workers' compensation insurance (Massachusetts Department of Industrial Accidents) · Learn about UI contribution rates (Massachusetts Department of Unemployment Assistance) · Employer's Guide to Unemployment Insurance (Massachusetts Department of Unemployment Assistance) · Advisory on the Acts Amending the Independent Contractor Law (Massachusetts Attorney General) Checked October 23, 2026
Michigan	Common-law control test	At 3 employees, or 1 at 35+ hours a week for 13 weeks	The Unemployment Insurance Agency says it relies on the IRS 20 factors when classification is disputed. MCL 418.115 covers private employers that regularly employ three or more employees at one time, and employers with fewer if at least one has been regularly employed by that employer 35 or more hours a week for 13 weeks or longer in the past 52 weeks. 2026 new employer UI rate: 2.7%, wage base: $9,000. New employers pay 2.7 percent for their first two years. The $9,000 wage base applies to qualified employers while the trust fund is at or above $2.5 billion. Michigan Employer Liability Toolkit (Michigan Unemployment Insurance Agency) · MCL 418.115 (Michigan Legislature) · Taxable Wage Base FAQ (Michigan Unemployment Insurance Agency) · Tax Rates and Liability FAQ (Michigan Unemployment Insurance Agency) Checked October 23, 2026
Minnesota	Common-law control test	From the first employee	Minn. Stat. 268.035 defines employment as service by an employee under the common law, and Unemployment Insurance Minnesota uses a factor analysis similar to the IRS, with control of the means and manner of the work as a key factor. Every employer liable under the act must insure or be approved to self-insure. Failing to insure can cost up to $1,000 per employee per week. 2026 new employer UI rate: see note, wage base: $44,000. New employers get the average rate for their industry. The 2026 figure for Administrative and Support and Waste Management is 2.04 percent, and the state also lists a base tax rate and an additional assessment, so no single rate is shown. Misclassification penalty and Cleaning businesses Minn. Stat. 181.722 allows penalties of up to $10,000 per misclassified worker, plus back wages and damages. Unemployment Insurance Minnesota names janitors among workers who are sometimes misclassified as independent contractors. Minn. Stat. 268.035, Definitions (Minnesota Office of the Revisor of Statutes) · Independent Contractors (Unemployment Insurance Minnesota) · Minn. Stat. 176.181 (Minnesota Office of the Revisor of Statutes) · UI Tax Rates (Unemployment Insurance Minnesota) · New Employer Rates (Unemployment Insurance Minnesota) · Minn. Stat. 181.722 (Minnesota Office of the Revisor of Statutes) Checked October 23, 2026
Mississippi	Common-law control test	At 5 or more employees	The Mississippi Department of Employment Security weighs the extent of control first, then factors such as tools, place of work, method of payment and relationship to the firm, and says no single fact decides it. The Workers' Compensation Commission says employers with five employees regularly employed must carry coverage. Smaller employers may choose to. 2026 new employer UI rate: 1%, wage base: $14,000. New employers pay 1.00 percent in the first year, 1.10 percent in the second and 1.20 percent after that, not counting the Workforce Investment and Training contribution. Employers pay on the first $14,000 of each employee's wages. Worker Classification (Mississippi Department of Employment Security) · Unemployment Tax Rates (Mississippi Department of Employment Security) · Employer FAQs (Mississippi Department of Employment Security) · Workers' Compensation Facts (Mississippi Workers' Compensation Commission) Checked October 23, 2026
Missouri	Common-law control test	At 5 or more employees	RSMo 288.034 applies the common law of agency right-to-control test: if the business controls the manner and means of the work, the worker is an employee. Employers with five or more employees must carry coverage, and part-time employees count. 2026 new employer UI rate: 2.376%, wage base: $9,000. The 2026 new employer rate for the All Others category is 2.376 percent on the first $9,000. RSMo 288.034, Employment defined (Missouri Revisor of Statutes) · Who is required to carry workers' compensation insurance coverage? (Missouri Department of Labor and Industrial Relations) · Tax Rates (Missouri Division of Employment Security) Checked October 23, 2026
Montana	State's own test	From the first employee	Paid service is employment until the Department of Labor and Industry is satisfied the worker is an independent contractor, which Montana law usually shows with an Independent Contractor Exemption Certificate for that type of work. Lacking a certificate does not by itself make a worker an employee. The Workers' Compensation Act applies to all employers. An employer with any employee must carry coverage through self-insurance, a private carrier or Montana State Fund. A contractor needs either an Independent Contractor Exemption Certificate or self-elected coverage under a Montana workers' comp policy. 2026 new employer UI rate: see note, wage base: $47,300. New employers are rated by industry, so no single rate is shown. The 2026 wage base is $47,300, and most employers also pay a 0.18 percent Administrative Fund Tax. MCA 39-51-203, Employment defined (Montana Legislature) · Independent Contractor Exemption Certificates (Montana Employment Relations Division) · 2026 Rate Insert (Montana Unemployment Insurance Division) · MCA 39-71-401, Employments covered and exemptions (Montana Legislature) Checked October 23, 2026
Nebraska	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	Neb. Rev. Stat. 48-604 counts paid service as employment unless all three prongs are shown, with prong B met by work outside the usual course of the business or outside all of its places of business. The act covers employers with one or more employees in the employer's regular business, and part-time employees are covered. 2026 new employer UI rate: 1.25%, wage base: $9,000. The 2026 new non-construction employer rate is 1.25 percent. The $9,000 base applies to most employers. Misclassification penalty Nebraska's Employee Classification Act fines misclassification, but it covers only construction and delivery businesses. Nebraska Revised Statute 48-604 (Nebraska Legislature) · Employer Frequently Asked Questions (Nebraska Workers' Compensation Court) · 2026 UI Guide to Understanding (Nebraska Department of Labor) · LB 563, Employee Classification Act (Nebraska Legislature) Checked October 23, 2026
Nevada	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	The Department of Employment, Training and Rehabilitation applies an ABC test and says all three conditions must be met: free from control, work outside the usual course of the business or outside all of its places of business, and an independently established business. The employer has the burden of proof. Coverage is mandatory once an employer has one or more employees. An employer without coverage faces an administrative fine of up to $15,000. 2026 new employer UI rate: 3%, wage base: $43,700. From January 1, 2026 the wage base is $43,700. New employers pay 2.95 percent plus the additional 0.05 percent Career Enhancement Program tax. UI Information for Employers (Nevada Department of Employment, Training and Rehabilitation) · Contributions Newsletter, December 2025 (Nevada Department of Employment, Training and Rehabilitation) · Employer Brochure (Nevada Division of Industrial Relations) Checked October 23, 2026
New Hampshire	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	RSA 282-A:9 counts paid services as employment unless the employer shows the worker is free from control, the work is outside the usual course of the business or outside all of its places of business, and the worker is customarily engaged in an independently established business. Any employer of one or more persons must secure workers' comp. Sole proprietors and partners are covered only if they elect it. An employer without coverage faces a civil penalty of up to $2,500 plus up to $100 per employee per day. 2026 new employer UI rate: 1.7%, wage base: $14,000. New employers pay 2.7 percent less the quarterly Trust Fund Reduction, which New Hampshire Employment Security lists as 1.0 percent for the fourth quarter of 2026, so 1.7 percent on the first $14,000 of each employee's wages. The reduction is set each quarter. Misclassification penalty Under RSA 281-A:2, the labor commissioner may assess a civil penalty of up to $2,500 when an employer misrepresents its relationship with a person providing services. RSA 282-A:9, Employment (New Hampshire General Court) · RSA Chapter 281-A, Workers' Compensation (New Hampshire General Court) · Employer Claims and Taxes (New Hampshire Employment Security) · Tax Rate FAQs (New Hampshire Employment Security) · Tax Rate Chart (New Hampshire Employment Security) Checked October 23, 2026
New Jersey	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	New Jersey uses the ABC test, with prong B met by work outside the usual course of the business or outside all of its places of business. The Department of Labor applies the same test to the Wage and Hour Law and the Wage Payment Law, under rules adopted May 5, 2026 that become operative October 1, 2026. All New Jersey employers not covered by federal programs must carry workers' comp or be approved to self-insure, with no minimum payroll. Not insuring is a disorderly persons offense with fines of up to $5,000 for the first ten days. 2026 new employer UI rate: 2.8%, wage base: $44,800. For 2026 new employers pay 2.6825 percent for unemployment plus 0.1175 percent for workforce funds on the first $44,800, and a separate 0.5 percent for temporary disability. Workers also pay their own unemployment, disability and family leave contributions. Misclassification penalty and Cleaning businesses N.J.S.A. 34:1A-1.18 allows penalties of up to $250 per misclassified worker for a first violation and up to $1,000 per worker after that, plus a payment to the worker of up to 5 percent of their gross earnings for the past twelve months. A 2019 Department of Labor release says misclassification is especially common in construction, janitorial services, home care, transportation, trucking and delivery. NJDOL adopts rules clarifying the ABC test (New Jersey Department of Labor and Workforce Development) · Employer's Guide to Workers' Compensation (WC-373) (New Jersey Department of Labor and Workforce Development) · Rate information, contributions, and due dates (New Jersey Department of Labor and Workforce Development) · Misclassification (New Jersey Department of Labor and Workforce Development) · Misclassification task force report (2019) (New Jersey Department of Labor and Workforce Development) Checked October 23, 2026
New Mexico	ABC test Prong B: outside the usual course of business, or outside all its places of business	At 3 or more employees	Section 51-1-42 NMSA treats paid services as employment unless the worker is free from control, the work is outside the usual course of the business or outside all of its places of business, and the worker is customarily engaged in an independently established business. Employers of three or more workers must carry workers' comp, and part-time, seasonal and paid family workers count. Licensed construction businesses must carry it at any size. 2026 new employer UI rate: see note, wage base: $34,800. The 2026 wage base is $34,800. A new employer pays the greater of its industry's average rate or 1 percent, so no single rate is shown. The Department of Workforce Solutions lists 1.19 percent for NAICS sector 56, Administrative and Support and Waste Management, which includes janitorial services. Section 51-1-42 NMSA 1978, Definitions (New Mexico Compilation Commission) · Frequently Asked Questions (New Mexico Workers' Compensation Administration) · UI Tax Information (New Mexico Department of Workforce Solutions) · How UI Tax Rates Are Calculated (New Mexico Department of Workforce Solutions) Checked October 23, 2026
New York	Common-law control test	From the first employee	The Department of Labor decides status for unemployment mainly by the level of supervision, direction and control over the worker. No single factor decides it, and a 1099 or a signed contractor agreement does not either. Virtually all New York employers must carry workers' comp for their employees. A business cannot require its employees to buy their own policies. 2026 new employer UI rate: 4.1%, wage base: $17,600. The 2026 wage base is $17,600. The 2026 new employer rate is 4.1 percent, which includes the 0.075 percent Re-employment Services Fund. Independent Contractors (New York State Department of Labor) · Is Workers' Compensation Coverage Required? (New York State Workers' Compensation Board) · Unemployment Insurance Rate Information (New York State Department of Labor) · Instructions for Form NYS-45 (1/26) (New York State Department of Taxation and Finance) Checked October 23, 2026
North Carolina	Common-law control test	At 3 or more employees	G.S. 96-1 ties employment to the federal definition and excludes independent contractors, defined as people not subject to the hiring person's control or direction over how the work is done. Businesses employing three or more employees on a regular basis are covered. Corporate officers count toward the three but may exclude themselves. 2026 new employer UI rate: 1%, wage base: $34,200. The 2026 taxable wage base is $34,200 and the beginning rate is 1 percent. G.S. 96-1, Definitions (North Carolina General Assembly) · Workers' Compensation Insurance Requirements (North Carolina Industrial Commission) · Tax Rate Information (North Carolina Division of Employment Security) Checked October 23, 2026
North Dakota	Common-law control test	From the first employee	N.D. Admin. Code 27-02-14-01 presumes employment unless the worker is an independent contractor under the common law test, with the right to control as the main question. Workforce Safety and Insurance is the only workers' comp insurer in North Dakota. All employees must be covered, including part-time, seasonal and occasional workers. 2026 new employer UI rate: 1%, wage base: $46,600. 1.00 percent is for a new non-construction employer with a positive balance. N.D. Admin. Code 27-02-14 (North Dakota Legislative Branch) · WSI FAQ (North Dakota Workforce Safety and Insurance) · UI Tax Rate Schedules 2026 (Job Service North Dakota) Checked October 23, 2026
Ohio	Common-law control test	From the first employee	Ohio Admin. Code 4141-3-05 asks whether the employer has the right to direct or control the work, weighing twenty common law factors together. An employer with one or more people regularly in the same business is covered and pays into the state insurance fund. Self-insurance is a privilege the Bureau of Workers' Compensation grants only to employers that qualify. 2026 new employer UI rate: 2.85%, wage base: $9,000. The 2026 new non-construction rate is 2.70 percent plus a 0.15 percent flat surcharge, 2.85 percent in total. Rule 4141-3-05, Definition of employment (Ohio Laws and Administrative Rules) · Who is Covered (Ohio Attorney General) · R.C. 4123.35, Payment of premiums by employers; self-insurance (Ohio Laws and Administrative Rules) · 2026 Rate Details (Ohio Department of Job and Family Services) Checked October 23, 2026
Oklahoma	Common-law control test	From the first employee	40 O.S. 1-210 writes the IRS 20-factor test from Revenue Ruling 87-41 into the unemployment law, and gives the Employment Security Commission exclusive authority to decide whether a worker is an employee or an independent contractor. The Workers' Compensation Commission says every employer, with a few exceptions, must carry coverage. One exemption covers five or fewer employees who are all related to the owner. 2026 new employer UI rate: 1.5%, wage base: $25,000. The Employment Security Commission lists a 2026 taxable wage base of $25,000 and a new employer rate of 1.5 percent. 40 O.S. 1-210, Employment (Oklahoma State Courts Network) · Guide for Employers (Oklahoma Workers' Compensation Commission) · Employer Important Numbers 2026 (Oklahoma Employment Security Commission) Checked October 23, 2026
Oregon	Control and own-business test	From the first employee	Oregon uses ORS 670.600 for the Employment Department, the Department of Revenue and the Workers' Compensation Division: free from direction and control, and customarily engaged in an independently established business, shown by meeting three of five listed criteria. The wage agency uses different criteria. Anyone who employs one or more workers is an employer and must carry coverage. 2026 new employer UI rate: 2.4%, wage base: $56,700. 2.4 percent is the 2026 new employer rate. Paid Leave Oregon is a separate contribution. Compliance and the law (State of Oregon, Independent Contractor information) · Compensation insurance overview (Oregon Workers' Compensation Division) · Current Tax Rate (Oregon Employment Department) Checked October 23, 2026
Pennsylvania	Control and own-business test	From the first employee	Pennsylvania's unemployment law presumes a worker is an employee unless the worker is free from control or direction under the contract and in fact, and customarily engaged in an independently established business. Any employer with at least one employee must insure, even if the workers are part-time or family members. 2026 new employer UI rate: 3.822%, wage base: $10,000. The 2026 newly liable non-construction rate is 3.822 percent, which includes the surcharge. Employees also have 0.07 percent withheld. UCP-32, Employee or Independent Contractor (Pennsylvania Department of Labor and Industry) · Workers' Compensation Compliance Details (Pennsylvania Department of Labor and Industry) · UC Trust Fund Solvency Measures in Effect for Calendar Year 2026 (Pennsylvania Department of Labor and Industry) Checked October 23, 2026
Rhode Island	Common-law control test	From the first employee	R.I. Gen. Laws 28-42-7 says employee or contractor status for unemployment is decided by the same factors the IRS uses. Employers with one or more employees must carry coverage. For comp, a worker is not treated as an independent contractor unless they file a DWC 11-IC form for each business that hires them. 2026 new employer UI rate: 1.21%, wage base: $30,800. The 2026 new employer rate is 1.21 percent, including the 0.21 percent Job Development Assessment. Misclassification penalty The Department of Labor and Training says an employer who misrepresents a worker as an independent contractor, or coerces one into signing the DWC 11-IC form, may face criminal prosecution. R.I. Gen. Laws 28-42-7 (Rhode Island General Assembly) · Workers' Compensation: Employers (Rhode Island Department of Labor and Training) · Workers' Compensation Compliance Brochure (Rhode Island Department of Labor and Training) · 2026 Tax Rates: Unemployment Insurance and Temporary Disability Insurance (Rhode Island Department of Labor and Training) Checked October 23, 2026
South Carolina	Common-law control test	At 4 or more employees	Department of Employment and Workforce regulation 47-8 applies the common law right-to-control test, looking at control, who furnishes equipment, how the worker is paid and the right to end the relationship. Businesses that regularly employ four or more employees in South Carolina must have coverage, and part-time workers and family members count. A business with an annual payroll under $3,000 is exempt. 2026 new employer UI rate: 1.06%, wage base: $14,000. For 2026 a new employer pays the 1.000 percent base rate plus a 0.060 percent contingency assessment, 1.060 percent in total. DEW Regulations Chapter 47 (South Carolina Department of Employment and Workforce) · Employer FAQs (South Carolina Workers' Compensation Commission) · Tax Rate Information (South Carolina Department of Employment and Workforce) Checked October 23, 2026
South Dakota	Control and own-business test	Not required	SDCL 61-1-11 counts paid service as employment unless the worker is free from control or direction under the contract and in fact, and customarily engaged in an independently established business. The Department of Labor and Regulation says no South Dakota law requires an employer to carry workers' comp and recommends it. An employer without it is treated as having elected not to operate under the comp law, and an injured worker can sue in civil court. 2026 new employer UI rate: 1.75%, wage base: $15,000. A new non-construction employer pays 1.20 percent in year one plus a 0.55 percent investment fee, 1.75 percent in total. SDCL 61-1-11 (South Dakota Legislature) · Reemployment Assistance Business FAQ (South Dakota Department of Labor and Regulation) · Workers' Compensation (South Dakota Department of Labor and Regulation) · SDCL chapter 62-5 (South Dakota Legislature) Checked October 23, 2026
Tennessee	Common-law control test	At 5 or more employees	For services performed on or after January 1, 2020, Tennessee uses the IRS 20 factors. Services before that date fell under the ABC test. Non-construction employers with five or more employees must carry coverage, and part-time employees count toward the five. 2026 new employer UI rate: 2.7%, wage base: $7,000. Since July 1, 2021 new employers in every industry have paid 2.7 percent, on the first $7,000, until they have 36 consecutive months of liability. Employee or Independent Contractor? (Tennessee Department of Labor and Workforce Development) · Who Must Carry Insurance? Non-Construction (Tennessee Bureau of Workers' Compensation) · UI Tax Rates (Tennessee Department of Labor and Workforce Development) · How is my premium rate determined? (Tennessee Department of Labor and Workforce Development) · Instructions for Report to Determine Status Applications for Employer Number (Tennessee Department of Labor and Workforce Development) Checked October 23, 2026
Texas	Common-law control test	Not required	The Texas Workforce Commission uses a 20-point guide. A worker is an employee if the business has the right to direct or control the worker as to the results and the details, and control need not actually be exercised. Most private employers can choose whether to carry workers' comp. An employer without it must tell its employees and file a notice of no coverage with the Division of Workers' Compensation each year, and Labor Code 406.033 takes away the contributory negligence, assumed risk and fellow employee defenses if an injured employee sues. 2026 new employer UI rate: 2.7%, wage base: $9,000. The 2026 entry-level rate is 2.70 percent for all groups. Misclassification penalty The Texas Workforce Commission says a business with a government contract can be charged $200 per misclassified worker. Classifying Employees and Independent Contractors (Texas Workforce Commission) · Tax Rates (Texas Workforce Commission) · Employer Coverage (Texas Department of Insurance, Division of Workers' Compensation) · Employer E-File online reporting: non-subscribers (Texas Department of Insurance) · Labor Code Chapter 406 (406.033) (Texas Legislature) Checked October 23, 2026
Utah	Control and own-business test	From the first employee	Utah Code 35A-4-204 presumes paid work is employment unless the worker is customarily engaged in an independently established business of the same nature and is free from control or direction over how the work is done. With a few exceptions, every employer must provide workers' comp for all its employees. 2026 new employer UI rate: see note, wage base: $50,700. New employers get a rate based on their industry's average, so no single rate is shown. The 2026 wage base is $50,700. Guidelines for Employment Status (Utah Department of Workforce Services) · Employers' Guide to Workers' Compensation (Utah Labor Commission) · Tax Rates FAQ (Utah Department of Workforce Services) Checked October 23, 2026
Vermont	ABC test Prong B: outside the usual course of business, or outside all its places of business	From the first employee	The Vermont Department of Labor says all three parts must be met, with prong B met by work outside the usual course of the business or outside all of its places of business. It also says a worker can be an employee under Vermont law but not under the IRS test. Coverage is required once you hire one or more employees, full or part time. 2026 new employer UI rate: 1%, wage base: $15,400. The 2026 wage base is $15,400. The new employer rate for most employers is 1 percent beginning July 1, 2026. Misclassification penalty The Department of Labor says misclassification brings penalties and debarment from state contracts. Who is an Employee vs. Independent Contractor (Vermont Department of Labor) · A Guide for Vermont Business Owners (Vermont Department of Labor) · Employer tax rate information (Vermont Department of Labor) · VDOL announces UI Taxable Wage Base for 2026 (Vermont Department of Labor) · What is Employee Misclassification? (Vermont Department of Labor) Checked October 23, 2026
Virginia	Common-law control test	At 3 or more employees	Va. Code 60.2-212 treats paid services as employment unless the worker is not an employee under the standard the IRS uses. A business with more than two part-time or full-time employees must carry coverage, and executive officers count. 2026 new employer UI rate: see note, wage base: $8,000. New employers start at a 2.5 percent base rate plus add-ons, so no single rate is shown. The wage base is $8,000. Misclassification penalty Va. Code 58.1-1901 allows civil penalties of up to $1,000 per misclassified worker for a first offense, $2,500 for a second and $5,000 for later offenses. Va. Code 60.2-212 (Virginia Law) · Employer FAQ (Virginia Workers' Compensation Commission) · How are tax rates assigned? (Virginia Employment Commission) · Va. Code 60.2-229 (Virginia Law) · Va. Code 58.1-1901 (Virginia Law) Checked October 23, 2026
Washington	State's own test	From the first employee	RCW 50.04.140 presumes paid services are employment. A business can overcome that with a three-part ABC test, or with a six-part alternative that also requires the worker to have a registered business, a business account with the Department of Revenue and separate business books. Every employer must insure with the state fund or qualify as a self-insurer. 2026 new employer UI rate: see note, wage base: $78,200. For 2026 new employers pay 115 percent of the average rate for their industry, so no single rate is shown. The wage base is $78,200. RCW 50.04.140 (Washington State Legislature) · RCW 51.14.010 (Washington State Legislature) · How we determine tax rates (Washington Employment Security Department) Checked October 23, 2026
Washington, DC	Common-law control test	From the first employee	The Department of Employment Services says the ordinary common law rules of master and servant decide who is an employee, looking at the right to supervise the work, how the worker is paid, and whether the worker runs an independent business. An employer with one or more employees must have workers' comp. 2026 new employer UI rate: 2.9%, wage base: $9,000. For 2026 the Department of Employment Services lists a new employer rate of 2.7 percent plus a 0.2 percent Administrative Assessment Fee, 2.9 percent in total, on the first $9,000 of each employee's wages. Liability Questions (DC Department of Employment Services) · Office of Workers' Compensation FAQs (DC Department of Employment Services) · Tax Information (DC Department of Employment Services) · Employer and Agent Portal (DC Department of Employment Services) Checked October 23, 2026
West Virginia	State's own test	From the first employee	The Employment Law Worker Classification Act, W. Va. Code 21-5I-4, sets one test for unemployment, workers' comp and wage payment. A contractor needs a signed written agreement with required acknowledgments, business or self-employment tax filings, actual control of the manner and means of the work, and three or more of nine listed criteria. Otherwise the IRS factors in Revenue Ruling 87-41 apply. W. Va. Code 23-2-1 covers all employers regularly employing another person, with an exemption for casual employers whose work is temporary and sporadic. 2026 new employer UI rate: see note, wage base: $9,500. The statute sets the new employer rate at 2.7 percent. A 2026 law cuts contribution rates by 7 percent from July 1, 2026 and adds an annual automation and administration fee, and the state has not published the net figure for new employers, so no single rate is shown. The wage base is $9,500. W. Va. Code 21-5I-4 (West Virginia Legislature) · W. Va. Code 23-2-1 (West Virginia Legislature) · W. Va. Code 21A-5-5 (West Virginia Legislature) · W. Va. Code 21A-1A-28 (West Virginia Legislature) · Senate Bill 1053 (2026), enrolled (West Virginia Legislature) Checked October 23, 2026
Wisconsin	Control and own-business test	At 3 employees, or $500 in wages in a quarter	For unemployment, the Department of Workforce Development presumes a worker is an employee unless free from control or direction and meeting at least six of nine business conditions. Workers' comp uses a separate test that requires all nine of its conditions. An employer with three or more employees must be insured the day it hires the third. An employer with even one employee must be insured once it pays $500 or more in wages in any calendar quarter. 2026 new employer UI rate: 3.05%, wage base: $14,000. For 2026 a new non-construction employer with taxable payroll under $500,000 pays 3.05 percent on the first $14,000. Larger new employers pay a different rate. Misclassification penalty Wisconsin's penalty for knowing misclassification under its unemployment law applies only to construction, painting and drywall employers. Worker Classification: UI test for general private employers (Wisconsin Department of Workforce Development) · Worker Classification: Unemployment Insurance (Wisconsin Department of Workforce Development) · Worker Classification: Worker's Compensation (Wisconsin Department of Workforce Development) · 2026 Unemployment Insurance Tax Rates (Wisconsin Department of Workforce Development) Checked October 23, 2026
Wyoming	State's own test	From the first employee	W.S. 27-3-104 treats a paid worker as an employee unless the worker is free from control over the details of the work, represents their services to the public as self-employed, and may send a substitute to do the work. Wyoming requires coverage through the Department of Workforce Services before work begins in the industries its statute lists as extrahazardous, and industry group 5617, services to buildings and dwellings, is on that list. The Department of Insurance calls Wyoming a monopolistic state, with the state fund as the primary insurer. 2026 new employer UI rate: see note, wage base: $33,800. New employers get a base rate for their industry, so no single rate is shown. The 2026 wage base is $33,800. Wyoming Statutes Title 27 (Wyoming Legislature) · Workers' Compensation: Employers (Wyoming Department of Workforce Services) · Workers' Compensation (Wyoming Department of Insurance) · Unemployment Taxable Wage Base (Wyoming Department of Workforce Services) · Unemployment Tax Rates (Wyoming Department of Workforce Services) Checked October 23, 2026

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Sources and further reading

Each row in the table links to the state pages it rests on. These are the federal pages behind the text above, followed by the state pages the text cites outside the table.

Internal Revenue Service, Topic no. 762, Independent contractor vs. employee.
Internal Revenue Service, Independent contractor (self-employed) or employee?
Internal Revenue Service, Voluntary Classification Settlement Program.
US Department of Labor, Wage and Hour Division, Employee or independent contractor classification under the FLSA.
Federal Register, Employee or Independent Contractor Classification Under the FLSA, final rule, January 10, 2024.
Federal Register, Employee or Independent Contractor Status Under the FLSA, FMLA and MSPA, proposed rule, February 27, 2026.
Internal Revenue Service, Topic no. 751, Social Security and Medicare withholding rates.
Social Security Administration, Contribution and benefit base.
Internal Revenue Service, Topic no. 759, Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and Schedule A (Form 940) for credit reduction states.
Internal Revenue Service, Instructions for Form SS-8.
Internal Revenue Service, Employment tax due dates.
US Citizenship and Immigration Services, Handbook for Employers M-274, Completing Section 2.
Office of Child Support Services, State new hire reporting requirements.
Internal Revenue Service, Worker reclassification, Section 530 relief, and Publication 1976, Do You Qualify for Relief Under Section 530?
Internal Revenue Manual, 4.23.5, Technical Guidelines for Employment Tax Issues.
Internal Revenue Service, Instructions for Forms 1099-MISC and 1099-NEC, and Forms and associated taxes for independent contractors.
Internal Revenue Service, Voluntary Classification Settlement Program frequently asked questions.
Internal Revenue Service, Determining if an employer is an applicable large employer.
Internal Revenue Service, CPEO customers: what you need to know.
US Department of Labor, Full-time employment, and Wage and Hour Division, FLSA frequently asked questions.

Texas Workforce Commission, TWC audits.
Oregon Employment Department, Audits.
Wyoming Department of Workforce Services, Audit FAQ.
Missouri Department of Labor and Industrial Relations, Can a general contractor require proof of workers' compensation coverage?.
Oregon Division of Financial Regulation, Final order, Agency Case No. INS-WCA 24-01-05, June 5, 2025.
Hawaii Disability Compensation Division, About Prepaid Health Care.
Louisiana State Legislature, R.S. 23:1773, Louisiana Voluntary Disclosure Program.

This article reports what federal agencies and each state's own pages say as of October 23, 2026. It is general information, not legal or tax advice. Worker classification turns on the facts of each working relationship, the rules change, and the dollar figures in the example are illustrations. Confirm your situation with your state's unemployment and workers' compensation agencies, the IRS, or an employment lawyer or tax professional before you change how you pay anyone.