http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
It is important that business owner or self employed healthcare recruiters correctly determine whether they are self employed independent contractor or an employee. The rule of thumb generally is the business owner must withhold all income taxes, withhold SS and medicare taxes and pay unemployment taxes.
Classifications of Workers
In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.
Misclassification of Employees
Consequences of Treating an Employee as an Independent Contractor
If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information.
Relief Provisions
If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977.
The Bureau of Labor and Statistics listed healthcare as the fastest growing careers and the medical staffing employment agencies are billion dollar business.
