We are in the information age where the “knowledge worker” is king. More and more workers wish to operate as “free agents”—independent contractors. The problem is the federal and state government haven’t quite figured that out yet. The hot topic for them is “reclassifying” free agent independent contractors to employees whenever possible, with devastating results from the business’ perspective. After all, they want their taxes.
The threshold and critical question
When someone performs work for your business, there really are only two ways to treat them under the law: as an employee or an independent contractor. The difference in the eyes of the law is critical and substantial. Most business owners know that employees trigger a host of administrative requirements such as having to provide workers’ compensation insurance, withholding federal and state taxes, and paying the employers portion of taxes. All laws governing the “employment relationship” kick in, such as wage and hour laws, discrimination laws, and wrongful termination laws. For independent contractors, none of this applies.
So how does management tell the difference?
Although a different test for independent contractor v. employee status applies depending on the circumstances, all of them boil to down to the “right to control the details” of the work, i.e. controlling the manner, mode, method or means of performing the work. For an independent contractor, the business pays for the result and exercises no (or little) control of how the contractor gets there. If you tell the worker where to go, when, how to get the job done, and provide the tools and equipment, then you probably have an employee. If management has the right to terminate the relationship “at will” then under most tests, the worker will be an employee.
At Vision Law® our attorneys deal with independent contractor v. employee issues regularily.
Vision Law® Corporation believes employers can save time, money, and unnecessary disruption to their business through effective, proactive efforts. That is why we have created our innovative fee programs for businesses. We invite you to consider how cost-effective representation could save your company millions, or simply save your company.