Employment relationship: a contractual relationship whereby an employer provides payment to employee in exchange for work or services. Independent contractor: a person who is in a working relationship that does not meet the criteria of employment. The benefits for independent contractors are tax savings, flexibility, and independence in arranging a work schedule. An employer may prefer to engage independent contractors because the relationship offers simplicity and fewer financial and legal obligations. The courts have also used a variety of tests to distinguish between the two: The degree of control exercised over the individual by the employer. The more direction and supervision provided by the employer, the more likely that the relationship is employment. The ownership of tools, chance of profit, and the risk of loss from performance of the requested service. Sharing profits and losses and the ownership of tools are indicative of an independent contractor.