Independent Contractor vs. Employee

In the past few months, I’ve had a few friends who are freelance writers and editors tell me they’d been approached by some companies who would like to hire them as independent contractors. The thing is, when they tell me about the gig, it always sounds as though the company is looking for an employee or at least a temporary employee.

Why do I say that? Well, the companies are requiring on-site work, requiring work be done on company-owned laptops, and requiring a specific number of hours be worked during any given week. The companies also want to pay by the hour rather than by the job. All big no-nos when talking about independent contractors.

The National Labor Relations Board (NLRB) is very clear on what factors determine whether or not someone is an employee or an independent contractor. They are:

  • The control the company exercises over the details of the work to be performed.
  • Whether the person performing the work is “engaged in a distinct occupation or business.”
  • The type of occupation, including whether the work is normally supervised or performed without supervision.
  • The skill required.
  • Whether the company or the worker provides tools, equipment, and/or a worksite.
  • “The length of time for which the person is employed.”
  • Whether the person performing the work is paid by time or by the job.
  • Whether the work is part of the company’s regular business.
  • Whether the person performing the work and the company believe they are creating an employment relationship.
  • Whether the person performing the work is in business.

The NLRB has ruled that employers should use these common-law factors alone to determine whether a person is an independent contractor. The board also noted, “There is no shorthand formula…all the incidents of the relationship must be assessed and weighed with no one factor being decisive.”

What Happens if Any of Those Factors are Met?

If any of these factors are met, then the person doing the work is recognized as an employee, regardless whether there is an independent contractor agreement that states the person is an independent contractor. That means the person performing the work is entitled to the same benefits as employees, e.g. benefits, PTO, 401K, etc. The company would be liable for employment taxes.

Does the NLRB Rule Over My Situation?

Most employees in the private sector are covered by the NLRA. However, the Act specifically excludes individuals who are employed

  • by Federal, state, or local government
  • as agricultural laborers
  • in the domestic service of any person or family in a home
  • by a parent or spouse
  • as an independent contractor
  • as a supervisor (supervisors who have been discriminated against for refusing to violate the NLRA may be covered)
  • by an employer subject to the Railway Labor Act, such as railroads and airlines
  • by any other person who is not an employer as defined in the NLRA

Other Laws

HR professionals, business owners, freelancers/independent contractors, and employees need to keep in mind there are other tests for independent contractor status under other state and federal laws that may produce different results.

 

 

 

Independent Contractor vs. Employee

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