To assist you in determining whether someone is an independent contractor or an employee, you should refer to the Internal Revenue Service Publication 15-A, Employer's Supplemental Tax Guide. (It is a supplement to Circular E.)
Part 1 of the guide is entitled Who Are Employees? and it provides this general rule: "...an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result."
Part 2 of the guide is entitled Employee or Independent Contractor? It addresses your question in detail. In Part 2 you will find a thorough discussion of the rules and many examples to help you distinguish between independent contractors and employees.
You can find a copy of Publication 15-A at http://www.irs.gov/pub/irs-pdf/p15a.pdf.
