Many companies use independent contractors based on their business needs or industry practice. This arrangement is often one that benefits the company and the independent contractor. Too often, however, employers misclassify a part time or occasional employee as an independent contractor or freelancer, and, by doing so, subject their business to substantial, unanticipated liability.
How to tell the difference. There are a variety of different tests under the many employment laws to determine who is an independent contractor and who is an employee. Most of these tests revolve around (1) who has the control over the work that is being done by the individual in question and (2) the economic realities of the relationship. Generally, it is risky to classify individuals as independent contractors when they are directly involved in the services your business provides to its customers.
Independent Contractor Agreements. One way to strengthen and memorialize the status of an individual as an independent contractor or freelancer is to enter in to a contract with that person memorializing the nature of the relationship. This demonstrates that the two parties are treating the relationship as an “arms-length” business relationship, rather than an employee relationship. The contract can also memorialize the control that the independent contractor has over the work that he or she is being contracted to perform, as well as other elements that will make the relationship more likely to be upheld as that of an independent contract under the various employment laws.
We work with businesses to evaluate their various independent contractor relationships, whether they are new or pre-existing. Our attorneys help companies to understand the factors that favor and weigh against the independent contractor classification on a case-by-case basis. Where there are independent contractor relationships, we assist the client in documenting that relationship. This includes drafting strong independent contractor agreements.
We also identify where businesses may have a joint-employer relationship with their independent contractors. Where such relationships exist, we counsel companies on how to monitor their independent contractors’ conduct with company employees so that the companies do not face liability for the actions of any of their contractors. We also counsel clients on how to limit their liability based on the other conduct of independent contractors, both conduct related and unrelated to the services the contractors are providing to the business.
Where a claim is brought, either by an independent contractor claiming that he or she is an employee, or by an employee or a third party alleging inappropriate conduct on the part of an independent contractor, our experienced litigators help businesses mount a vigorous defense. With our attorneys’ extensive knowledge of the various tests for independent contractor status under various laws, we can help a company make the best legal arguments to support its position. Where a business is brought into a suit as a joint employer, we are also prepared to make the best arguments as to why the business is not a proper party to the suit.
Whatever the legal challenge a company is facing, our attorneys are there to work with the employer to provide the best defense possible that is also consistent with the needs of the business.