As stated earlier, if an employer can direct workers on how to perform services, they will generally be classified as common-law employees (as opposed to an independent contractor). However, even if it is determined that your workers are common-law employees, they will not be treated as employees for employment tax purposes for the period that the employer qualifies for Section 530 Relief. Under the Revenue Reconciliation Act of 1978, Section 530 Relief applies if you meet the following:

• The employer never treated the individual as an employee for employment tax purposes and the employer filed all applicable federal tax forms (i.e. form 1099-Misc.).
• The employer had a "reasonable" basis for not treating the worker as an employee. You can satisfy the "reasonable," basis standard falling within one of the three safe harbor methods:
• You relied on rulings, case law, technical advice or private rulings addressed to the employer.
• Past IRS audits were performed and there were no assessments of employment taxes for workers in substantially similar positions as the individuals in question.
• There is a long standing recognized practice of significant segment of the employer’s industry.