Employee Status

Whether a worker is an “employee” or an “independent contractor” makes a big difference. Independent contractors are not entitled to many benefits that must be offered to employees, such as overtime pay, health and pension benefits, social security credits, protection against discrimination, and unemployment insurance. Some employers wrongly classify their employees as “independent contractors” to keep away from providing those benefits. It is in your best interest to recognize whether you are properly classified as an employee or an independent contractor. There are always noteworthy cases when employers mistakenly classified employees and independent contractors. In most cases, the company has agreed to pay hundreds of thousands of dollars to settle these cases. Courts use various tests for employees for deciding different issues, however, there are some common principles. In wage and hour instances, the attention is focused on the subsequent factors:

• The degree of control the employer exercises over the day-to-day work performed;
• The amount of the worker’s investment in facilities and work equipment;
• The worker’s opportunities for profit and loss;
• The degree to which the worker’s independent initiative, judgment, and planning is necessary for the success of the worker’s operation;
• The permanency of the relationship between the employer and the worker;
• The extent to which the services are a part of the employer’s business;
• How dependent the worker is on the employer for continued work.

The courts will have a look at all the facts of a selected case and evaluate them to the ideal factors. Thus, the employees ought to understand that an agreement that he or she is an independent contractor, even though crucial, will not decide the case.