Substitute teachers’ employment classification depends on factors like control over work, financial arrangements, and contractual terms. Most U.S. school districts classify substitutes as employees, granting them wage/hour protections and tax withholdings. However, some charter/private schools may treat them as independent contractors. Misclassification risks legal penalties for institutions under IRS and FLSA guidelines.
How Does the IRS Determine Worker Classification for Substitutes?
The IRS uses a 20-factor “Common Law Test” focusing on behavioral control (schedules/training), financial control (expense reimbursement/paid hourly), and relationship type (benefits/contract duration). Schools typically maintain sufficient control over substitutes’ duties to qualify them as employees. Independent contractor status requires demonstrated autonomy in work methods and client choice.
Recent IRS guidance emphasizes three primary categories for evaluation. Behavioral control examines whether the school dictates lesson plans or teaching methods. Financial control considers who provides classroom materials and whether substitutes can realize profit/loss. Relationship factors analyze written contracts and benefit eligibility. In 2023, 84% of IRS worker classification audits involving schools resulted in reclassification of substitutes to employee status.
| IRS Factor Category | Employee Indicators | Contractor Indicators |
|---|---|---|
| Behavioral Control | Mandated attendance times | Self-scheduled shifts |
| Financial Arrangements | Hourly wage with taxes withheld | Flat daily rate with 1099 form |
| Relationship Type | Eligibility for district benefits | Short-term project-based work |
Why Do Most Schools Classify Subs as Employees?
Employee status enables schools to: 1) Schedule substitutes in district-wide systems 2) Require specific teaching methods 3) Mandate training sessions 4) Withhold income taxes 5) Provide workers’ compensation. The National Education Association estimates 93% of public school substitutes receive W-2 forms, compared to 67% in private institutions.
School districts prioritize employee classification to maintain quality control over classroom instruction. Employee substitutes must follow prescribed curricula and assessment methods, ensuring continuity in student learning. This model also simplifies payroll management through centralized systems tracking hours worked across multiple schools. Recent surveys show 78% of districts increased substitute training requirements since 2020, further reinforcing employee relationships through mandatory professional development.
What Legal Precedents Affect Substitute Teacher Classification?
Key cases include Vizcaino v. Microsoft (1990s IC misclassification) and O’Connor v. Davis (1997) establishing educational institution control benchmarks. The 2018 California Supreme Court Dynamex decision introduced the ABC test, making employee classification mandatory unless workers: A) Operate freely from control, B) Perform non-core business work, and C) Have established independent trade.
When Can Substitutes Legally Be Considered Independent Contractors?
Rare cases include: 1) Specialty instructors setting own curricula 2) Short-term emergency hires (under 3 days) 3) Substitute staffing agency workers 4) Multi-district “roving” substitutes with business licenses. The Department of Labor requires consistent contractor relationships – schools can’t arbitrarily shift classifications between assignments.
What Are the Tax Implications of Each Classification?
Employee substitutes: Schools pay 7.65% FICA tax, withhold income taxes. Contractors: Subs pay 15.3% self-employment tax plus quarterly estimates. Contractors can deduct unreimbursed classroom expenses (IRS Form 2106). Misclassified workers may file SS-8 forms to request IRS determination, potentially triggering back taxes/penalties for schools.
How Do State Laws Influence Classification Practices?
Variations include: California (strict ABC test), Texas (modified common law test), and Massachusetts (6-factor criteria). Seven states require employee classification for all K-12 substitutes. Montana and Oklahoma permit contractor status for substitutes working <10 days/year. Always consult state education codes and labor regulations.
“Schools increasingly face class-action lawsuits over substitute misclassification. A 2022 Illinois case resulted in $4.3M back pay settlement. Our firm recommends districts: 1) Document all supervisory interactions 2) Use standardized contracts 3) Conduct annual classification audits. When in doubt, the employee designation provides stronger legal protection.”
– Dr. Elaine Torres, Education Labor Attorney
FAQ
- Do substitute teachers get unemployment benefits?
- Only if classified as employees. Most states allow substitutes to claim unemployment during summer breaks if they have reasonable assurance of continued work.
- Can substitutes negotiate contractor rates?
- Public school substitutes typically receive standardized daily rates. Private institutions may allow rate negotiations, but frequent rate-setting by the worker strengthens independent contractor claims.
- How does union membership affect classification?
- Unionized substitutes (found in 19 states) are always classified as employees. Collective bargaining agreements override individual contractor arrangements.