Are You an “Independent Contractor?”

Charles Shinkle Watson

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Employment / Labor Attorney

Contributor Level 15

Posted over 1 year ago. 2 helpful votes

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Determining the differences, or

If it looks like a duck, and it quacks like a duck...

  • Are you working 60 hours a week, but not getting overtime?

  • Have you been working for the same person for a couple of years on a full-time basis, but when you get injured you are told that no, you cannot take time off, and – oh, by the way – there is no workers comp?

  • Did you receive a 1099 instead of a W-2? And found out that no employer contributions were made to the government, and now you need to come up with the cash to pay self-employment taxes, etc?

All of this could happen to you if you are an independent contractor. Increasingly employers misclassify employees as “independent contractors" so that they need not pay certain taxes, and avoid complying with the, among other things, wage and hour laws. While there are many truly independent contractors in the workforce, many who are called independent contractors are actually employees. If you are an “independent contractor", you may want to review your situation and determine whether you are actually an employee.

The governing law is usually something lawyers can easily identify . However, when determining whether or not someone is an independent contractor the tests applied can vary from purpose to purpose. This is not the place to go over all of the different tests. However, we can explore some of the basics.

The single most important thing to remember is that just because someone calls you an independent contractor does not mean you are an independent contractor. Whether or not you are an independent contractor depends on the facts – not the title. Many courts resort to the factors used by the Internal Revenue Service, which may be summarized as follows:

  • Behavioral Control: Things that show whether the business has a right to direct and control how you do your work. For example: instructions given to you about when and where to do the work; what tools or equipment to use; and whether you or the employer deal with customer's requests for change. The more control asserted by the employer, the more likely you are an employee.

  • Financial Control: Things that show the employer controls the business aspects of your job. For example: whether you have a significant investment in the tools and equipment necessary for you to do your job, whether you can work for other people, maybe at the same time you are working for the employer; whether you or the employer chooses, and pays, others working with you on the job; and whether or not you get paid a particular hourly wage or salary rather than a flat amount for the job. Perhaps most telling, if you do not run a risk of losing money on the job, you are likely an employee.

  • Type of Relationship: Things such as: whether or not you have a written contract; whether or not you work for your employer from time to time and other employers from time to time, or work full-time for the one employer; and whether or not what you do for the employer is what the employer is in business to do, or is merely ancillary. (For example, if you work full-time as a construction worker for several years for a single homebuilder, it is likely that you are an employee. On the other hand, if you empty the trash at the homebuilder’s office (and others’), it’s certainly reasonable to be doing so as an independent contractor.)

Many states are enacting laws that create presumptions in favor of the employer-employee relationship – especially in certain industries. For example, in Illinois, if you are working for a building contractor you will be considered an employee unless the contractor can show that you are free from his control and direction, that what you do is out of the normal course of services provided by the contractor, you are engaged in an independently established trade or business, and you are a legitimate sole proprietor or partner in a legitimate partnership. The burden is on the employer in this situation.

The materials above are simplified from the actual law. The question of who is an independent contractor vs. an employee can be extremely difficult and fact intensive when presenting the matter to the court. However, in the real world, most people can recognize it when they see it. If you think you are an employee rather than an independent contractor, you should consult a lawyer who concentrates his or her practice in employment law. Don’t try and do this on your own. It can be hard enough with a lawyer! Good luck!

Additional Resources

Department of Labor Misclassification Page

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