Worker classification is the process of determining whether an individual should be classified as an employee or an independent contractor. It involves assessing various factors such as the degree of control exercised by the employer, the nature of the work performed, the method of payment, and the relationship between the parties. Worker classification is governed by labor laws and tax regulations to ensure compliance with legal requirements and to protect the rights of workers.

Example
Company XYZ hires a delivery driver to transport goods to customers. The driver uses their own vehicle and works on a part-time basis, choosing their own schedule. Despite the driver's flexibility and independence, Company XYZ exerts significant control over the driver's work, providing detailed instructions on routes and delivery requirements. Additionally, the driver is integrated into the company's operations and is not engaged in an independent business. In this case, the driver is likely to be classified as an employee rather than an independent contractor due to the level of control exerted by the company.