Articles

13Jul

Independent Contractor Tests: A State-by-State Assessment

AUTHORS: LaToya Lang, Morgan Wiegand, Jennifer McDonald

Worker classification is one of the more pressing issues facing survey, opinion and marketing researchers today.  Misclassification of respondents, moderators, and interviewers may subject researchers to lawsuits, investigations, audits, complaints, and economic liabilities including payment of back taxes and fines, providing unemployment, employee benefits, and worker’s compensation. Therefore, it is imperative that research professionals know and understand state law defining independent contractors, and develop a strategy for establishing independent contractor relationships in the future.

The 50 states and the District of Columbia generally use either the “ABC” rule or the common law rule to determine whether a worker is an employee or an independent contractor. 

 “ABC” Rule: 18 states have adopted the “ABC” rule, so called because it is usually stated in three paragraphs of the law, all three of which must be satisfied in order for the worker to be treated as an independent contractor.  New Jersey is a typical example:

 (6) Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter . . . unless and until it is shown to the satisfaction of the division that:

(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and

 (B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business.

  • “A and C” Rule:  Seven states use a variation of the ABC rule, or the “A and C” rule.  A state’s adoption of this variation usually does not affect the determination of “independent contractor” status, because the “B” factor is usually always satisfied.  (The services being performed are usually always outside the course of the company’s business for which such service is performed.)
  • “A, and B or C” rule:  One state, Maine, uses this nuance.  The adoption of this variation allows an independent contractor relationship to be found by meeting either “B” or “C”.
  • Common law rule:  24 states and the District of Columbia use the common law rule to determine whether a worker is an employee or independent contractor. Under this rule, the worker is an independent contractor if the company has the right to control only the result to be accomplished by the worker’s services, and not the details and means by which that result is accomplished.   Compared to the “ABC” rule, this rule requires a lesser degree of independence for the worker before the court would conclude that the worker is an independent contractor, and is therefore easier to meet.
  • Several states, in addition to their general rules, have enacted statutes enumerating particular factors that will be considered, and sometimes for particular occupations. 

 

 Listing of State Laws

ALABAMA

LAW

Ala. Code §25-5-1

“Employer”

(4) Every person who employs another to perform a service for fire and pags wages directly to the person….

“Employee or Worker”

(5)  …The terms include every person in the service of another under any contract of hire, express or implied, oral or written, including aliens and also including minors who are legally permitted to work under the laws of this state…

RULE FOR INDEPENDENT CONTRACTORS

There is no statutory definition of “independent contractor” in Alabama.  

Alabama follows the common law rule.

Applicable Cases:

  • Atchison v. Boone Newspapers, Inc. (981 So.2d 427), “In determining whether an individual is an independent contractor or whether an employer-employee relationship exists, for purposes of workers’ compensation, a court looks to the reserved right of control rather than the actual exercise of control.” 
  • Tucaloosa Veneer Co. v. Martin (233 Ala. 567), “Test whether relation of employer and employee or of independent contractor exists is reserved right of control rather than actual exercise of control.”
  • Birmingham Post Co v. Sturgeon (227 Ala. 162), “Whether relation of “independent contractor” or that of “servant” exists depends upon whether person for whom one is working has control over means and agencies by which work is done, or over means and agencies by which result is produced.” 

 

ALASKA

LAW

Alaska Stat.  § 23.20.525

“Employment”

(a) In this chapter, unless the context otherwise requires, "employment" means

(1)   service performed by an individual for wages or by an officer of a corporation, including service in interstate commerce;

(2)   service performed by an individual who under (8) of this subsection has the status of an employee;

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RULE FOR INDEPENDENT CONTRACTORS

There is no statutory definition of “independent contractor” in Alaska.

Alaska follows the “ABC” rule.

Alaska Stat.  § 23.20.525

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(8) service performed by an individual whether or not the common-law relationship of master and servant exists, unless and until it is shown to the satisfaction of the department that

(A) the individual has been and will continue to be free from control and direction in connection with the performance of the service, both under the individual's contract for the performance of service and in fact;

(B) the service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

(C) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed

 

ARKANSAS

LAW

A.C.A. § 11-10-210

Employment

(a)(1)(B) Any individual who, under the usual law rules applicable in determining the employer-employee relationship, has the status of an employee;

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RULE FOR INDEPENDENT CONTRACTORS

There is no statutory definition of “independent contractor” in Arkansas.

Arkansas follows the “ABC” rule.

A.C.A. § 11-10-210

(e) Service performed by an individual for wages shall be deemed to be employment subject to this chapter irrespective of whether the common law relationship of master and servant exist, unless and until it is shown to the satisfaction of the director that:

(1)   Such individual has been and will be free from control and direction in connection with the performance of the service, both under his or her contract for the performance of service and in fact; and

(2)   The service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

(3)   The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

Applicable Cases

  • Stepherson v. Director, Employment Sec. Dept. (895 S.W.2d  168) “In order to obtain independent contractor exemption under Employment Security Act, it is necessary that employer prove each of three statutory subsections…”
  • Network Design Engineering, Inc. v. Director, Employment Sec. Dept., (917 S.W.2d 168). “To obtain independent contractor exemption from payment of unemployment insurance taxes, employer must prove each of three subsections of applicable statute. A.C.A. § 11-10-201(e).”

 

ARIZONA

LAW

Ariz. Rev. Stat. §23-613.01

“Employee

A. "Employee" means any individual who performs services for an employing unit and who is subject to the direction, rule or control of the employing unit as to both the method of performing or executing the services and the result to be effected or accomplished, except employee does not include:

1. An individual who performs services as an independent contractor, business person, agent or consultant, or in a capacity characteristic of an independent profession, trade, skill or occupation.

2. An individual subject to the direction, rule or control or subject to the right of direction, rule or control of an employing unit solely because of a provision of law regulating the organization, trade or business of the employing unit

3. An individual or class of individuals that the federal government has decided not to and does not treat as an employee or employees for federal unemployment tax purposes.

4. An individual if the employing unit demonstrates the individual performs services in the same manner as a similarly situated class of individuals that the federal government has decided not to and does not treat as an employee or employees for federal unemployment tax purposes.

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REGULATIONS

R6-3-1723

“Employee

A.  "Employee" means any individual who performs services for an employing unit, and who is subject to the direction, rule or control of the employing unit as to both the method of performing or executing the services and the result to be effected or accomplished. Whether an individual is an employee under this definition shall be determined by the preponderance of the evidence.

1. "Control" as used in A.R.S. § 23-613.01, includes the right to control as well as control in fact.

2. "Method" is defined as the way, procedure or process for doing something; the means used in attaining a result as distinguished from the result itself.

B.  "Employee" as defined in subsection (A) does not include:

1. An individual who performs services for an employing unit in a capacity as an independent contractor, independent business person, independent agent, or independent consultant, or in a capacity characteristic of an independent profession, trade, skill or occupation. The existence of independence shall be determined by the preponderance of the evidence.

2. An individual subject to the direction, rule, control or subject to the right of direction, rule or control of an employing unit ".... solely because of a provision of law regulating the organization, trade or business of the employing unit". This paragraph is applicable in all cases in which the individual performing services is subject to the control of the employing unit only to the extent specifically required by a provision of law governing the organization, trade or business of the employing unit.

  1. "Solely" means, but is not limited to: Only, alone, exclusively, without other.
  2. "Provision of law" includes, but is not limited to: statutes, regulations, licensing regulations, and federal and state mandates.
  3.  The designation of an individual as an employee, servant or agent of the employing unit for purposes of the provision of law is not determinative of the status of the individual for unemployment insurance purposes. The applicability of paragraph (2) of this subsection shall be determined in the same manner as if no such designated reference had been made.

C.  The following services are exempt employment under this Chapter, unless there is evidence of direction, rule or control sufficient to satisfy the definition of an employee under subsection (A) of this Section, which is distinct from any evidence of direction, rule or control related to or associated with establishing the nature or circumstances of the services considered pursuant to this subsection:

1. Services by an individual for an employing unit which are not a part or process of the organization, trade or business of the employing unit, and the individual is not treated by the employing unit in a manner generally characteristic of the treatment of employees.

a. Services by an individual not treated by the employing unit in a manner generally characteristic of the treatment of employees means the individual performing the services is not treated by the employing unit in substantially the same manner as employees of that employing unit.

b. The words "part" and "process" are not synonymous. If the individual performs services which are either a part of or process in the organization, trade or business, the conditions of this paragraph are not met and the services cannot be exempt under this paragraph. "Process" refers to those services which are directly responsible for carrying out the fundamental purpose or purposes for which the organization, trade or business exists; e.g., painting and repairing automobile bodies in an automobile body paint and repair shop. "Part" refers to any other services which are essential to the operation or maintenance of the organization, trade or business; e.g., routine cleaning of premises and maintenance of tools, equipment and building. In addition to services which are a part of or process in the organization, trade or business, there are those services which are for the purposes of the organization, trade or business but are merely ancillary or incidental and are not essential or necessary to the conduct of the organization, trade or business; e.g., landscaping area around the automobile body paint and repair shop.

2. Services by an individual for an employing unit through isolated or occasional transactions, regardless of whether such services are a part or process of the organization, trade or business of the employing unit.

a. The phrase "isolated or occasional" has its commonly understood meaning. The intent of the relationship between the employing unit and the individual performing the services is to be considered with the intent of the parties being that it is on a permanent basis or for a long period; e.g., an individual employed who either quits or is discharged after a brief period of employment, would not be considered an isolated or occasional transaction regardless of how brief the period of employment may be.

b. An individual who performs services on less than thirteen days in a calendar quarter will be presumed to be performing isolated or occasional transactions. An individual who performs services on thirteen days or more in a calendar quarter will be presumed not to be performing isolated or occasional transactions. In all cases in which there is a standing or continuing arrangement with an individual to perform required 8services on either a regularly scheduled basis or on call as requested, it will be presumed the individual is not performing isolated or occasional transactions.

D.  In determining whether an individual who performs services is an employee under the general definition of subsection (A), all material evidence pertaining to the relationship between the individual and the employing unit must be examined. Control as to the result is usually present in any type of contractual relationship, but it is the additional presence of control, as determined by such control factors as are identified in paragraph (2) of this subsection, over the method in which the services are performed, that may create an employment relationship.

1. The existence of control solely on the basis of the existence of the right to control may be established by such action as: reviewing written contracts between the individual and the employing unit; interviewing the individual or employing unit; obtaining statements of third parties; or examining regulatory statutes governing the organization, trade or business. In any event, the substance, and not merely the form of the relationship must be analyzed.

2. The following are some common indicia of control over the method of performing or executing the services:

a. Authority over individual's assistants. Hiring, supervising, and payment of the individual's assistants by the employing unit generally shows control over the individuals on the job. Sometimes, one worker may hire, supervise, and pay other workers. He may do so as the result of a contract in which he agrees to provide materials and labor and under which he is responsible only for the attainment of a result; in which case he may be independent. On the other hand, if he does so at the direction of the employing unit, he may be acting as an employee in the capacity of a foreman for or representative of the employer.

b. Compliance with instructions. Control is present when the individual is required to comply with instructions about when, where and how he is to work. Some employees may work without receiving instructions because they are highly proficient in their line of work and can be trusted to work to the best of their abilities; however, the control factor is present if the employer has the right to instruct or direct. The instructions may be oral or may be in the form of manuals or written procedures which show how the desired result is to be accomplished.

c. Oral or written reports. If regular oral or written reports bearing upon the method in which the services are performed must be submitted to the employing unit, it indicates control in that the worker is required to account for his actions. Periodic progress reports relating to the accomplishment of a specific result may not be indicative of control if, for example, the reports are used to establish entitlement to partial payment based upon percentage of completion. Completion of forms customarily used in the particular type of business activity, regardless of the relationship between the individual and the employing unit, may not constitute written reports for purposes of this factor; e.g., receipts to customers, invoices, etc.

d. Place of work. Doing the work on the employing unit's premises is not control in itself; however, it does imply that the employer has control, especially when the work is of such a nature that it could be done elsewhere. A person working in the employer's place of business is physically within the employer's direction and supervision. The fact that work is done off the premises does indicate some freedom from control; however, it does not by itself mean that the worker is not an employee. In some occupations, the services are necessarily performed away from the premises of the employing unit. This is true, for example, of employees in the construction trades, or employees who must work over a fixed route, within a fixed territory, or at any outlying work station.

e. Personal performance. If the services must be rendered personally it indicates that the employing unit is interested in the method as well as the result. The employing unit is interested not only in getting a desired result, but, also, in who does the job. Personal performance might not be indicative of control if the work is very highly specialized and the worker is hired on the basis of his professional reputation, as in the case of a consultant known in academic and professional circles to be an authority in the field. Lack of control may be indicated when an individual has the right to hire a substitute without the employing unit's knowledge or consent.

f. Establishment of work sequence. If a person must perform services in the order of sequence set for him by the employing unit, it indicates the worker is subject to control as he is not free to follow his own pattern of work, but must follow the established routines and schedules of the employing unit. Often, because of the nature of an occupation, the employing unit does not set the order of the services, or sets them infrequently. It is sufficient to show control, however, if the employing unit retains the right to do so.

g. Right to discharge. The right to discharge, as distinguished from the right to terminate a contract, is a very important factor indicating that the person possessing the right has control. The employing unit exercises control through the ever present threat of dismissal, which causes the worker to obey any instructions which may be given. The right of control is very strongly indicated if the worker may be terminated with little or no notice, without cause, or for failure to use specified methods, and if the worker does not make his services available to the public on a continuing basis. An independent worker, on the other hand, generally cannot be terminated as long as he produces an end result which measures up to his contract specifications. Many contracts provide for termination upon notice or for specified acts of nonperformance or default, and may not be indicative of the existence of the right to control. Sometimes, an employing unit's right to discharge is restricted because of a contract with a labor union or with other entities. Such a restriction does not detract from the existence of an employment relationship.

h. Set hours of work. The establishment of set hours of work by the employing unit is a factor indicative of control. This condition bars the worker from being master of his own time, which is a right of the independent worker. Where fixed hours are not practical because of the nature of the occupation, a requirement that the worker work at certain times is an element of control.

i. Training. Training of an individual by an experienced employee working with him, by required attendance at meetings, and by other methods, is a factor of control because it is an indication that the employer wants the services performed in a particular method or manner. This is especially true if the training is given periodically or at frequent intervals. An independent worker ordinarily uses his own methods and receives no training from the purchaser of his services.

j. Amount of time. If the worker must devote his full time to the activity of the employing unit, the employing unit has control over the amount of time the worker spends working and, impliedly, restricts him from doing other gainful work. An independent worker, on the other hand, is free to work when and for whom he chooses. Full time does not necessarily mean an 8-hour day or a 5-or 6-day week. Its meaning may vary with the intent of the parties, the nature of the occupation and customs in the locality. These conditions should be considered in defining "full time". Full-time services may be required even though not specified in writing or orally. For example, a person may be required to produce a minimum volume of business which compels him to devote all of his working time to that business, or he may not be permitted to work for anyone else, and to earn a living he necessarily must work full time.

k. Tools and materials. The furnishing of tools, materials, etc. by the employing unit is indicative of control over the worker. When the worker furnishes the tools, materials, etc., it indicates a lack of control, but lack of control is not indicated if the individual provides tools or supplies customarily furnished by workers in the trade.

l. Expense reimbursement. Payment by the employing unit of the worker's approved business and/or traveling expenses is a factor indicating control over the worker.

Conversely, a lack of control is indicated when the worker is paid on a job basis and has to take care of all incidental expenses. Consideration must be given to the fact some independent professionals and consultants require payment of all expenses in addition to their fees.

E.  Among the factors to be considered in addition to the factors of control, such as those identified in subsection (D), when determining if an individual performing services may be independent when paragraph (1) of subsection (B) is applicable, are:

1. Availability to public. The fact that an individual makes his services available to the general public on a continuing basis is usually indicative of independent status. An individual may offer his services to the public in a number of ways. For example, he may have his own office and assistants, he may display a sign in front of his home or office, he may hold a business license, he may be listed in a business directory or maintain a business listing in a telephone directory, he may advertise in a newspaper, trade journal, magazine, or he may simply make himself available through word of mouth, where it is customary in the trade or business.

2. Compensation on job basis. An employee is usually, but not always, paid by the hour, week or month; whereas, payment on a job basis is customary where the worker is independent. Payment by the job may include a predetermined lump sum which is computed by the number of hours required to do the job at a fixed rate per hour. Payment on a job basis may involve periodic partial payments based upon a percent of the total job price or the amount of the total job completed. The guarantee of a minimum salary or the granting of a drawing account at stated intervals, with no requirement for repayment of the excess over earnings, tends to indicate that existence of an employer-employee relationship.

3. Realization of profit or loss. An individual who is in a position to realize a profit or suffer a loss as a result of his services is generally independent, while the individual who is an employee is not in such a position. Opportunity for profit or loss may be established by one or more of a variety of circumstances; e.g.: 

a. The individual has continuing and recurring significant liabilities or obligations in connection with the performance of the work involved, and success or failure depends, to an appreciable degree, on the relationship of receipts to expenditures.

b. The individual agrees to perform specific jobs for prices agreed upon in advance, and pays expenses incurred in connection with the work, such as wages, rents or other significant operating expenses.

4. Obligation. An employee usually has the right to end his relationship with his employer at any time he wishes without incurring liability, although he may be required to provide notice of his termination for some period in advance of the termination. An independent worker usually agrees to complete a specific job. He is responsible for its satisfactory completion and would be legally obligated to make good for failure to complete the job, if legal relief were sought.

5. Significant investment. A significant investment by a person in facilities used by him in performing services for another tends to show an independent status. On the other hand, the furnishing of all necessary facilities by the employing unit tends to indicate the absence of an independent status on the part of the worker. Facilities include equipment or premises necessary for the work, but not tools, instruments, clothing, etc., that are provided by employees as a common practice in their particular trade. If the worker makes a significant investment in facilities, such as a vehicle not reasonably suited to personal use, this is indicative of an independent relationship. A significant expenditure of time or money for an individual's education is not necessarily indicative of an independent relationship.

6. Simultaneous contracts. If an individual works for a number of persons or firms at the same time, it indicates an independent status because, in such cases, the worker is usually free from control by any of the firms. It is possible, however, that a person may work for a number of people or firms and still be an employee of one or all of them. The decisions reached on other pertinent factors should be considered when evaluating this factor.

F.  Whether the preponderance of the evidence is being weighed to determine if the individual performing services for an employing unit is an employee under the general definition of employee contained in subsection (A), or may be independent when paragraph (1) of subsection (B) is applicable, the factors considered shall be weighed in accordance with their appropriate value to a correct determination of the relationship under the facts of the particular case. The weight to be given to a factor is not always constant. The degree of importance may vary, depending upon the occupation or work situation being considered and why the factor is present in the particular situation. Some factors may not apply to particular occupations or situation, while there may be other factors not specifically identified herein that should be considered.

G. An individual is an employee if he performs services which are subject to the Federal Unemployment Tax Act or performs services which are required by federal law to be covered by state law.

RULE FOR INDEPENDENT CONTRACTORS

Arizona DOES have a statutory definition of “independent contractor.”

“An independent contractor is a person engaged in work for a business, and who while so engaged is independent of that business in the execution of the work and not subject to the rule or control of the business for which the work is done, but is engaged only in the performance of a definite job or piece of work, and is subordinate to that business only in effecting a result in accordance with that business design.” A.R.S. § 23-902

Arkansas follows the Common Law rule.

Indicia of control are set forth above by Arizona Regulations. 

Applicable Cases

  • Ocean Accident & Guarantee Corp. v. Kennison (42 Ariz. 349).  “Employee is “independent contractor,” if he is not subject to rule or control of person for whom work is done, except in accomplishing a certain result.”
  • Consolidated Motors v. Ketcham (49 Ariz. 295).  “Ultimate test of whether one acting for another is a servant or an independent contractor is whether he is subject to the other’s control or right to control in the manner in which he reaches desired result, which may be shown by the extent of control, the kind of occupation with reference to usual manner of conducting it in the locality, whether employer or workman supplied instrumentalities and place of work, and method of payment, whether by time or by the job.”

 

CALIFORNIA

LAW

Unemployment Insurance Code

§621.  "Employee" means all of the following:

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   (b) Any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee.

Labor Code

§ 3351. “Employee; inclusions”

“‘Employee’ means every person in the service of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed…”

REGULATIONS

Cal. Admin. Code tit. 22

§ 4304-1. Employee Defined, Rules Generally Applicable to Determinations of

Employment.

Whether an individual is an employee for the purposes of Sections 621(b) and 13020 of the code will be determined by the usual common law rules applicable in determining an employer-employee relationship. Under those rules, to determine whether one performs services for another as an employee, the most important factor is the right of the principal to control the manner and means of accomplishing a desired result. If the principal has the right to control the manner and means of accomplishing the desired result, whether or not that right is exercised, an employer-employee relationship exists. Strong evidence of that right to control is the principal's right to discharge at will, without cause.

(a)  If it cannot be determined whether the principal has the right to control the manner and means of accomplishing a desired result, the following factors will be taken into consideration:

(1)  Whether or not the one performing the services is engaged in a separately established occupation or business.

(2)  The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of a principal without supervision.

(3)  The skill required in performing the services and accomplishing the desired result.

(4)  Whether the principal or the person providing the services supplies the instrumentalities, tools, and the place of work for the person doing the work.

(5)  The length of time for which the services are performed to determine whether the performance is an isolated event or continuous in nature.

(6)  The method of payment, whether by the time, a piece rate, or by the job.

(7)  Whether or not the work is part of the regular business of the principal, or whether the work is not within the regular business of the principal.

(8)   Whether or not the parties believe they are creating the relationship of employer and employee.

(9)  The extent of actual control exercised by the principal over the manner and means of performing the services.

(10) Whether the principal is or is not engaged in a business enterprise or whether the services being performed are for the benefit or convenience of the principal as an individual.

(b)  The factors enumerated in (a) above are indicia of the right to control. Where there is independent evidence that the principal has the right to control the manner and means of performing the service in question it is not necessary to consider the above enumerated factors. When those factors are considered, a determination of whether an individual is an employee will depend upon a grouping of factors that are significant in relationship to the service being performed.

RULE FOR INDEPENDENT CONTRACTORS

California DOES have a statutory definition of “independent contractor.”

“‘Independent contractor’ means any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.” California Labor Code § 3353

California follows the Common Law rule.

Indicia of control to determine if worker is an employee are set forth above by California Regulations. 

Further factors to “prove independent contractor status” are set forth by the Labor Code § 2750.5 and include:

(a) That the individual has the right to control and discretion as to the manner of performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.

(b) That the individual is customarily engaged in an independently established business.

(c) That the individual's independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principal's work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract.

Applicable Cases

  • Harris v. Vector Marketing Corp. (656 F.Supp.2d 1128). “Under California law, whether a person is an independent contractor or an employee largely turns on whether the employer controls the details of the person’s work.”
  • Los Flores School Dist. v. Industrial Acc. Commission (13 Cal.App.2d 180).  “‘Independent Contractor’ is one who renders service for another for specified recompense to attain specified result and who is under principal’s control only as to result of work, and not as to means or methods whereby result is to be accomplished.” 

 

COLORADO

LAW

Colorado Revised Statutes Annotated § 8-40-202.

“(1) Employee means

(a)(1)(A) Every person in the service of the state, or of any county, city, town, or irrigation, drainage, or school district or any other taxing district therein, or of any public institution or administrative board thereof under any appointment or contract of hire, express or implied…

(2)(a) Notwithstanding any other provision of this section, any individual who performs services for pay for another shall be deemed to be an employee, irrespective of whether the common-law relationship of master and servant exists, unless such individual is free from control and direction in the performance of the service, both under the contract for performance of service and in fact and such individual is customarily engaged in an independent trade, occupation, profession, or business related to the service performed…”

 

C.R.S.A. § 8-70-115.

Employment - "Federal Unemployment Tax Act".

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(b)   Notwithstanding any other provision of this subsection (1) and notwithstanding

the provisions of section 8-80-101, service performed by an individual for another shall be deemed to be employment, irrespective of whether the common-law relationship of master and servant exists, unless and until it is shown to the satisfaction of the division that such individual is free from control and direction in the performance of the service, both under his contract for the performance of service and in fact; and such individual is customarily engaged in an independent trade, occupation, profession, or business related to the service performed. For purposes of this section, the degree of control exercised by the person for whom the service is performed over the performance of the service or over the individual performing the service, if exercised pursuant to the requirements of any state or federal statute or regulation, shall not be considered.

(c)    To evidence that such individual is engaged in an independent trade, occupation, profession, or business and is free from control and direction in the performance of the service, the individual and the person for whom services are performed may either show by a preponderance of the evidence that the conditions set forth in paragraph (b) of this subsection (1) have been satisfied, or they may demonstrate in a written document, signed by both parties, that the person for whom services are performed does not:

(I)    Require the individual to work exclusively for the person for whom services are performed; except that the individual may choose to work exclusively for the said person or a finite period of time specified in the document;

(II)  Establish a quality standard for the individual; except that such person can provide plans and specifications regarding the work but cannot oversee the actual work or instruct the individual as to how the work will be performed;

(III)   Pay a salary or hourly rate but rather a fixed or contract rate;

(IV)  Terminate the work during the contract period unless the individual violates the terms of the contract or fails to produce a result that meets the specifications of the contract;

(V)   Provide more than minimal training for the individual;

(VI)  Provide tools or benefits to the individual; except that materials and equipment may be supplied;

(VII)  Dictate the time of performance; except that a completion schedule and a range of mutually agreeable work hours may be established;

(VIII)  Pay the individual personally but rather makes checks payable to the trade or business name of the individual; and

(IX)    Combine his business operations in any way with the individual's business, but instead maintains such operations as separate and distinct.

RULE FOR INDEPENDENT CONTRACTORS

Colorado does NOT have a statutory definition of “independent contractor.”

Colorado follows the A and C rule.

C.R.S.A. § 8-40-202

“(2)(a) Notwithstanding any other provision of this section, any individual who performs services for pay for another shall be deemed to be an employee, irrespective of whether the common-law relationship of master and servant exists,

unless such individual is free from control and direction in the performance of the service, both under the contract for performance of service and in fact;  and

such individual is customarily engaged in an independent trade, occupation, profession, or business related to the service performed.

For purposes of this section, the degree of control exercised by the person for whom the service is performed over the performance of the service or over the individual performing the service shall not be considered if such control is exercised pursuant to the requirements of any state or federal statute or regulation.

(b)(I) To prove that an individual is engaged in an independent trade, occupation, profession, or business and is free from control and direction in the performance of the service, the individual and the person for whom services are performed may show by a preponderance of the evidence that the conditions set forth in paragraph (a) of this subsection (2) have been satisfied. The parties may also prove independence through a written document.

(II) To prove independence it must be shown that the person for whom services are performed does not:

(A) Require the individual to work exclusively for the person for whom services are performed; except that the individual may choose to work exclusively for such person for a finite period of time specified in the document;

(B) Establish a quality standard for the individual; except that the person may provide plans and specifications regarding the work but cannot oversee the actual work or instruct the individual as to how the work will be performed;

(C) Pay a salary or at an hourly rate instead of at a fixed or contract rate;

(D) Terminate the work of the service provider during the contract period unless such service provider violates the terms of the contract or fails to produce a result that meets the specifications of the contract;

(E) Provide more than minimal training for the individual;

(F) Provide tools or benefits to the individual; except that materials and equipment may be supplied;

(G) Dictate the time of performance; except that a completion schedule and a range of negotiated and mutually agreeable work hours may be established;

(H) Pay the service provider personally instead of making checks payable to the trade or business name of such service provider; and

(I) Combine the business operations of the person for whom service is provided in any way with the business operations of the service provider instead of maintaining all such operations separately and distinctly.

 

CONNECTICUT

LAW

Connecticut General Statutes Annotated § 31-275

(9)(A)  “Employee means any person who:

(i) Has entered into or works under any contract of service or apprenticeship with an employer, whether the contract contemplated the performance of duties within or without the state.

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C.G.S.A §31-222

(a) (1) "Employment", subject to the other provisions of this subsection, means:

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(B)   Any service . . . subject to the other provisions of this subsection, service performed after December 31, 1977, including service in interstate commerce, by any of the following: (i) Any officer of a corporation; (ii) any individual who, under either common law rules applicable in determining the employer-employee relationship or under the provisions of this subsection, has the status of an employee. Service performed by an individual shall be deemed to be employment subject to this chapter irrespective of whether the common law relationship of master and servant exists, unless and until it is shown to the satisfaction of the administrator that (I) such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under his contract for the performance of service and in fact; and (II) such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and (III) such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed…

RULE FOR INDEPENDENT CONTRACTORS

Connecticut does NOT have a statutory definition of “independent contractor.”

Common law definition; Chute v. Mobil Shipping and Transp. Co. (627 A.2d 956). “…independent contractor is defined as one who, exercising independent employment, contracts to do piece of work according to his own methods and without being subject to control of his employer, except as to result of work.”

Connecticut follows the ABC rule.

C.G.S.A §31-222

Employee-Employer relationship does NOT exist if:

“(I) Such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under his contract for the performance of service and in fact; and

(II) Such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

 (III) Such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed…”

 

DELAWARE

LAW

19 Del. Code § 2301 (1)

“‘Employee’ means every person in service of any corporation (private, public, municipal or quasi-public), association, firm or person, excepting those employees excluded by this subchapter, under any contractor of hire, express or implied, oral or written, or performing services for a valuable consideration…”

19 Del. Code § 3302(10)

(10) "Employment" means:

(A)   Any service performed prior to January 1, 1978, which was employment as defined in this subdivision prior to such date and, subject to the other provisions of this subdivision, service performed after December 31, 1977, including service in interstate commerce, by

(ii)   Any individual who, under paragraph (K) of this subdivision, has the status of an

employee; . . .

(K)   Notwithstanding any other provisions of this chapter and irrespective of whether the common-law relationship of employer and employee exists, services performed by an individual for wages, unless and until it is shown to the satisfaction of the Department that:

(i) Such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under the individual's contract for the performance of services and in fact; and

(ii) Such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

(iii)   Such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

RULE FOR INDEPENDENT CONTRACTORS

Delaware does NOT have a statutory definition of “independent contractor.”

Delaware follows the ABC rule.

19 Del. Code § 3302(10)

Employee-employer relationship does NOT exist if:

(i) Such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under the individual's contract for the performance of services and in fact; and

(ii) Such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

(iii)   Such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

 

DISTRICT OF COLUMBIA

LAW

D.C. Code § 36-301

(9) “Employee” includes every person, including a minor, in the service of another under any contract of hire or apprenticeship, written or implied, in the District of Columbia, except:

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(E) An employee engaged in employment that is casual and not in the usual course of trade, business, occupation, or profession of the employer…

D.C. Code § 51-101.

(2) (A) "Employment" means:

(i) Any service performed prior to January 1, 1978, which was employment as defined in this subsection prior to such date and, subject to the other provisions of this subsection, service performed after December 31, 1971, including service in interstate commerce, by:

*   *   *   *   *

(II)  Any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an employee;…

RULE FOR INDEPENDENT CONTRACTORS

D.C. does NOT have a statutory definition of “independent contractor.”

D.C. follows the Common Law rule.

D.C. Code § 51-101.

(2) (A) "Employment" means:

(II)  Any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an employee;…

Applicable Cases

  • Munson v. District of Columbia Dept. of Employment Services (721 A.2d 623). “Under the relative nature of the work test for determining whether claimant is an “employee” for worker’s compensation purposes, an employment relationship, rather than an independent contractor relationship, is found when the work being done is an integral part of the regular business of the employer, and when claimant, relative tot the employer, does not furnish an independent business or professional service.”

 

FLORIDA

LAW

Fla. Stat. § 440.02

15(a) “Employee” means any person who receives remuneration from an employer fro the performance of any work or service while engaged in any employment under any appointment or contract for hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed, and includes, but it no limited to, aliens and minors.

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Fla. Stat. § 443.1216 

Employment

Employment, as defined in s. 443.036, is subject to this chapter under the following conditions:

(1)(a)  The employment subject to this chapter includes a service performed, including a service performed in interstate commerce, by:

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(a)(2)   An individual who, under the usual common-law rules applicable in determining the employer-employee relationship, is an employee.

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RULE FOR INDEPENDENT CONTRACTORS

Florida does NOT have a statutory definition of “independent contractor.”

Florida follows the Common Law rule.

Fla. Stat. § 440.02

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(d) “Employee does not include:

1. An independent contractor who is not engaged in the construction industry.

a. In order to meet the definition of independent contractor, at least four of the following criteria must be met:

(I) The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations;

(II) The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal regulations;

(III) The independent contractor receives compensation for services rendered or work performed and such compensation is paid to a business rather than to an individual;

(IV) The independent contractor holds one or more bank accounts in the name of the business entity for purposes of paying business expenses or other expenses related to services rendered or work performed for compensation;

(V) The independent contractor performs work or is able to perform work for any entity in addition to or besides the employer at his or her own election without the necessity of completing an employment application or process; or

(VI) The independent contractor receives compensation for work or services rendered on a competitive-bid basis or completion of a task or a set of tasks as defined by a contractual agreement, unless such contractual agreement expressly states that an employment relationship exists.

b. If four of the criteria listed in sub-subparagraph a. do not exist, an individual may still be presumed to be an independent contractor and not an employee based on full consideration of the nature of the individual situation with regard to satisfying any of the following conditions:

(I) The independent contractor performs or agrees to perform specific services or work for a specific amount of money and controls the means of performing the services or work.

(II) The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform.

(III) The independent contractor is responsible for the satisfactory completion of the work or services that he or she performs or agrees to perform.

(IV) The independent contractor receives compensation for work or services performed for a commission or on a per-job basis and not on any other basis.

(V) The independent contractor may realize a profit or suffer a loss in connection with performing work or services.

(VI) The independent contractor has continuing or recurring business liabilities or obligations.

(VII) The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures.

c. Notwithstanding anything to the contrary in this subparagraph, an individual claiming to be an independent contractor has the burden of proving that he or she is an independent contractor for purposes of this chapter.

Applicable Cases

  • Buncy v. Certified Grocers (592 So.2d 336).  “Test for “control,” for determining whether one is independent contractor…if generally determined on basis of who has right to direct what shall be done, and when, where, and how it shall be done; other factors to consider included selection and engagement of work, method of payment, and whether employer or worker supplies tools required for job.”

 

GEORGIA

LAW

Ga. Code § 34-8-35

(a) As used in this chapter, the term 'employment' means any service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied.

. . . .

(f) Services performed by an individual for wages shall be deemed to be employment subject to this chapter unless and until it is shown that:

(1)(A) Such individual has been and will continue to be free from control or direction over the performance of such services, both under the individual’s contract of service and in fact; and

(B) Such individual is customarily engaged in an independently established trade, occupation, profession, or business.

RULE FOR INDEPENDENT CONTRACTORS

Georgia does NOT have a statutory definition of “independent contractor.”

Georgia  follows the A and C rule.

Ga. Code § 34.8.35

Employee-Employer relationship does not exist if:

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“(1)(A) Such individual has been and will continue to be free from control or direction over the performance of such services, both under the individual’s contract of service and in fact; and

(B) Such individual is customarily engaged in an independently established trade, occupation, profession, or business.”

Applicable Cases

  • De Bord v. Proctor and Gamble Distributing (58 F.Supp. 157). “True test of whether relationship is one of employer-employee or employer-independent contractor is whether the employer, under contract, either oral or written, assumes the right to control the time, manner and method of executing the work, as distinguished from the right merely to require certain definite results in conformity to the contract.”

 

HAWAII

LAW

Hawaii Rev. Statutes

§383-1

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“Employee” means any individual in the employment of another person.

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§383-2

(a) As used in this chapter, unless the context clearly requires otherwise, "employment", subject to sections 383-3 to 383-9, means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied.

RULE FOR INDEPENDENT CONTRACTORS

Hawaii does NOT have a statutory definition of “independent contractor.”

Hawaii follows the ABC rule.

Hawaii Rev. Statutes §383-6

Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this chapter irrespective of whether the common law relationship of master and servant exists unless and until it is shown to the satisfaction of the department of labor and industrial relations that:

(1)    The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2)    The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3)    The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service.

 

IDAHO

LAW

Idaho Code §72-102(12)

“Employee” is synonymous with “workman” and means any person who has entered into the employment of, or who works under contract of service or apprenticeship with, an employer.

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Idaho Code §72-1316.

(1) "Covered employment" means an individual's entire service performed by him for wages or under any contract of hire, written or oral, express or implied.

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RULE FOR INDEPENDENT CONTRACTORS

Idaho DOES have a statutory definition of “independent contractor.”

I.C. § 72-102 (17) “Independent contractor” means nay person who renders service for a specified recompense for a specific result, under the right to control or actual control of his principal as to the result of his work only and not as to the means by which such result is accomplished…

Idaho follows the A and C rule.

Idaho Code §72-1316.

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(4) Services performed by an individual for remuneration shall, for the purposes of the employment security law, be covered employment unless it is shown;

(a)  That the worker has been and will continue to be free from control or direction in the performance of his work, both under his contract of service and in fact; and

(b) That the worker is engaged in an independently established trade, occupation, profession, or business.

Applicable Cases

  • Wise v. Arnold Transfer and Storage Co., Inc. (109 Idaho 20).  “General test to establish relationship of employer-employee for purposes of workmen’s compensation exclusivity, as opposed to independent contractor relationship, is right to control and direct activities of employee, or power to control details of work to be performed and to determine how it shall be done and whether it shall stop or continue; in contrast, independent contractor is subject to control only as to result or product of work.”  

 

ILLINOIS

LAW

Illinois Compiled Statutes

820 ILCS 405/206

…"employment" means any service performed prior to July 1, 1940, which was employment as defined in this Act prior to that date, and any service  after  June  30,  1940, performed  by  an individual for an employing unit, including service in interstate commerce  and  service  on  land  which  is  owned,  held  or possessed  by the United States, and including all services performed by an officer of a business corporation, without  regard  to  whether  such services  are   executive,  managerial,  or manual in nature, and without regard to whether such officer is or is not a stockholder or a member of the board of directors of the corporation.

820 ILCS 115/2

The term “employee” shall include any individual permitted to work by an employer in an occupation, but shall not include any individual:

(1) who has been and will continue to be free from control and direction over the performance of his work, both under his contract of service with his employer and in fact; and

(2) who performed works which is either outside the usual course of business or is performed outside of all the places of business of the enterprise for which such service is performed; and

(3) who is in an independently established trade, occupation, profession, or business.

RULE FOR INDEPENDENT CONTRACTORS

Illinois does not have a statutory definition of “independent contractor.”

Illinois follows the ABC rule.

820 ILCS 405/212

Service performed by an individual for an employing unit, whether or not such individual employs others in connection with the performance of such services, shall be deemed to be employment unless and until it is proven in any proceeding where such issue is involved that—

 A.  Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and

B.   Such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

 C.  Such individual is engaged in an independently established trade, occupation, profession, or business.

 

INDIANA

LAW

Indiana Code § 22-3-6-1

(b) “Employee” means every person, including a minor, in the service of another, under any contract of hire or apprenticeship, written or implied, except one whose employment is both casual and not in the usual course of the trade, business, occupation or profession of the employer. 

Indiana Code § 22-4-8-1

Sec. 1. "Employment," subject to the other provisions of this Section, means service, including service in interstate commerce performed for remuneration or under any contract of hire, written or oral, expressed or implied.

RULE FOR INDEPENDENT CONTRACTORS

Indiana DOES have a statutory definition of “independent contractor.”

IC § 22-3-6-1(b)(7)

“A person is an independent contractor in the construction trades and not an employee under IC 22-3-2 through IC 22-3-6 if the person is an independent contractor under the guidelines of the United States Internal Revenue Service.”

Indiana follows the ABC rule.

Indiana Code § 22-4-8-1

(b) Services performed by an individual for remuneration shall be deemed to be employment subject to this article irrespective of whether the common-law relationship of master and servant exists, unless and until all the following conditions are shown to the satisfaction of the department:

(1) The individual has been and will continue to be free from control and direction in connection with the performance of such service, both under the individual's contract of service and in fact.

(2) The service is performed outside the usual course of the business for which the service is performed.

(3) The individual:

(A) is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed; or

(B) is a sales agent who receives remuneration solely upon a commission basis and who is the master of the individual's own time and effort.

Applicable Cases

  • Merritt v. Johnson (190 F.Supp. 454). An “independent contractor” is one who, in course of independent employment, undertakes to perform work subject to right of person for whom work is done to control result or product of work, not means or methods used.
  • Daniels v. Terminal Transport Co. (119 N.E.2d 554). “An independent contractor, within contemplation of the Workman’s Compensation Law, is one who, in doing the particular work, is his own master and the subservience which exists is only to the extent of the desired result.”
  • Meredith v. Northern Ind. Co-op. Ass’n (132 N.E.2d 267).  “No exact rule can be stated to determine question of whether workman is employee or independent contractor, but most important test is power or right to direct and control means, manner and methods of performance.”

 

IOWA

LAW

Iowa Code § 85.61

11. “Worker” or “employee” means a person who has entered into the employment of, or works under contract of service, express or implied, or apprenticeship, for an employer….”

Iowa Code § 96.18

18.  "Employment".

a.  Except as otherwise provided in this subsection "employment" means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, expressed or implied. Employment also means any service performed prior to January 1, 1978, which was employment as defined in this subsection prior to such date and, subject to the other provisions of this subsection, service performed after December 31, 1977, by:

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(2)  Any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee,  . . .

REGULATIONS

Admin. Code § 871-23.19(96)

871-23.19(96)  Employer-employee and independent contractor relationship.

23.19(1) The relationship of employer and employee exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. An employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. It is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if the employer has the right to do so. The right to discharge or terminate a relationship is also an important factor indicating that the person possessing that right is an employer. Where such discharge or termination will constitute a breach of contract and the discharging person may be liable for damages, the circumstances indicate a relationship of independent contractor. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools, equipment, material and a place to work to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, that individual is an independent contractor. An individual performing services as an independent contractor is not as to such services an employee under the usual common law rules. Individuals such as physicians, lawyers, dentists, veterinarians, construction contractors, public stenographers, and auctioneers, engaged in the pursuit of an independent trade, occupation, business or profession, in which they offer services to the public, are independent contractors and not employees.

Professional employees who perform services for another individual or legal entity are covered employees.

23.19(2) The nature of the contract undertaken by one for the performance of a certain type, kind, or piece of work at a fixed price is a factor to be considered in determining the status of an independent contractor. In general, employees perform the work continuously and primarily their labor is purchased, whereas the independent contractor undertakes the performance of a specific job. Independent contractors follow a distinct trade, occupation, business, or profession in which they offer their services to the public to be performed without the control of those seeking the benefit of their training or experience.

23.19(3) Independent contractors can make a profit or loss. They are more likely to have unreimbursed expenses than employees and to have fixed, ongoing costs regardless of whether work is currently being performed. Independent contractors often have significant investment in real or personal property that they use in performing services for someone else.

23.19(4) Employees are usually paid a fixed wage computed on a weekly or hourly basis while an independent contractor is usually paid one sum for the entire work, whether it be paid in the form of a lump sum or installments. The employer-employee relationship may exist regardless of the form, measurement, designation or manner of remuneration.

23.19(5) The right to employ assistants with the exclusive right to supervise their activity and completely delegate the work is an indication of an independent contractor relationship.

23.19(6) Services performed by an individual for remuneration are presumed to be employment unless and until it is shown to the satisfaction of the department that the individual is in fact an independent contractor. Whether the relationship of employer and employee exists under the usual common law rules will be determined upon an examination of the particular facts of each case.

23.19(7) If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus, if such relationship exists, it is of no consequence that the employee is designated as a partner, coadventurer, agent, independent contractor, or the like.

23.19(8) All classes or grades of employees are included within the relationship of employer and employee. For example, superintendents, managers and other supervisory personnel are employees.

RULE FOR INDEPENDENT CONTRACTORS

Iowa does not have a statutory definition of “independent contractor.”

Iowa follows the common law rule.

Applicable Cases

  • Hassebroch v. Weaver Const. Co. (67 N.W.2d 105).  “Principal test of independent contractor is his freedom to determine for himself manner in which specified result shall be accomplished, and other tests are existence of contract for certain piece of work at fixed price, independent nature of his calling, his right to hire and supervise assistants, his obligation to furnish necessary tools and equipment, time for which he is employed, method of payment, whether by job or time and whether his work is part of his employer’s regular business.”
  • Swain v. Monona County(163 N.W.2d 918).
    • “An independent contractor is one who carrier on independent business and contracts to do a piece of work according to his own methods, subject to employer’s control only with respect to results.”
    • “Independent contractor as used in compensation statute, retains common-law meaning.”
    • “Existence of independent contractor relationship is tested by existence of contract for performance by a person of certain piece of kind of work at fixed price, independent nature of business or a distinct calling, employment of assistants with right to supervise their activities, obligation to furnish tools, supplies, and materials, right to control progress of work except as to final results, time for which workman is employed, method of payment, and question whether work is part of employer’s regular business.”

 

KANSAS

LAW

Kansas Statutes § 44-508

(b)  “Workman” or “employee” or “worker” means any person who has entered into the employment of or works under any contract of service or apprenticeship with an employer.

Kansas Statutes § 44-703

 (i)  "Employment" means:

(1) Subject to the other provisions of this subsection, service, including service in interstate commerce, performed by

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(B)  Any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee;

 *****

(3)   The term "employment" shall also include:

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(D)  Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this act unless and until it is shown to the satisfaction of the secretary that: (i) Such individual has been and will continue to be free from control or direction over the performance of such services, both under the individual's contract of hire and in fact; and (ii) such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed.

ADMINISTRATIVE PUBLICATIONS

What is the difference between an employee and an independent contractor?

An employer-employee relationship exists when a person who hires an individual to perform services has the right to exercise control over the manner and means by which the individual performs his or her services. The right of control, whether or not exercised, is the most important factor in determining the relationship. The right to discharge a worker at will and without cause is strong evidence of the right of direction and control.

Among others, the following factors are also considered.

  • Whether the one performing the services makes the services available to the general public.
  • Whether the principal or the person providing the services supplies the tools, equipment, and place of work for the person doing the work.
  • The length of time for which the services are performed to determine whether the performance is an isolated event or continuous in nature.
  • The method of payment, whether by time, a piece rate, or by the job.
  • Whether or not the work is part of the regular business of the principal.
  • The extent of actual control exercised by the principal over the manner and means of performing the services.
  • Whether the worker can make business decisions that would enable him or her to earn a profit or incur a financial loss. Investment of the worker's time is not sufficient to show a risk of loss.

A written contract which claims to create the relationship of principal and independent contractor is not controlling if the practice of the parties shows that the principal retains the right of control under the common law test.  The strong indication of employment is when the work being done is an integral part of the regular business of the employer and the work is performed at the place of business.

While the law does not define an independent contractor, court decisions have held that the common law tests of master and servant must be applied in making determinations of whether services rendered by an individual are in the capacity of an employee or independent contractor.  The Kansas Employment Security Law provides two specific tests to be applied to the worker's service to determine if the service constitutes that of an independent contractual nature (K.S.A. 44-703).

  1. Such individual has been and will continue to be free from control or direction over the performance of such services, both under the individual's contract of hire and in fact.
  2. Such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed.

These tests are of a conjunctive nature and BOTH MUST BE MET for a worker to be considered as an individual contractor, rather than an employee.  The degree of control necessary to establish an employer/employee relationship must be assessed with regard to the custom and usage surrounding the performance of the particular service involved. A thorough examination of the employer/employee relationship should be made before classifying a person as an independent contractor.

RULE FOR INDEPENDENT CONTRACTORS

Kansas does not have a statutory definition of “independent contractor.”

Kansas follows the common law rule.

Applicable Cases

  • Scammahorn v. Gibraltar Sav. And Loan Ass’n (416 P.2d 771). “For workmen’s compensation purposes, an independent contractor is one who, in exercise of independent employment, contracts to do a piece of work according to his own methods and subject to his employer’s control only as to end product or final result of his work.”
  • Schroeder v. American Nat. Bank (154 Kan. 721).  “In determining whether compensation claimant is an employee or an independent contractor, determining feature are whether there is a right on the part of the employer to control manner in which work was carried on, regardless of whether the right is exercised, and whether the employer has right to discharge claimant before the work is done.”

 

KENTUCKY

LAW

KRS § 337.010

(d) “Employer” is any person, either individual, corporation, partnership, agency, or firm who employs an employee and includes any person, either individual, corporation, partnership, agency, or firm acting directly or indirectly in the interest of an employer in relation to any employee; and

(e) “Employee” is any person employed by or suffered or permitted to work for an employer.
KRS § 341.050

(1) As used in this chapter, unless the context clearly requires otherwise and subject to the provisions of KRS 341.055, “covered employment” means service, including service in interstate commerce, performed by:

(a) An individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee;

ADMINISTRATIVE PUBLICATION

WHAT IF I USE INDEPENDENT CONTRACTORS (CONTRACT LABOR) AND ISSUE 1099S FOR SERVICE INSTEAD OF HIRING EMPLOYEES?

Independent contractors are self-employed and, as such, do not have to report to

Unemployment Insurance. However, many covered employees are misclassified as independent contractors. The division determines whether an individual worker is an employee or an independent contractor based on "common law" rules. For example, we may classify a worker as an independent contractor if the following rules apply:

  • Is in business for himself and offers services to the public. Ordinarily, advertises services in some fashion. 
  • The services provided are not in the normal line of business for the client for whom the services are provided. (If the business contracting for these services requires the services on a regular basis in order to operate, the worker is not usually considered an independent contractor.)
  • They possess a special skill or ability, and may require special tools which they provide and performs services without additional training and supervision.
  • The services are usually provided for a limited time (a single job)  and are paid for by the job rather than by the hour, etc.

These are general examples; a formal determination of a worker’s status can only be made by reviewing his particular relationship to the business for which he performs service. By law, a worker cannot contract away his rights to unemployment benefits. Therefore, a worker may be determined to be an employee even if he has willingly entered into a contract to work as an independent contractor. The division makes determinations of covered employment subject to Kentucky unemployment insurance law. These determinations may be different from those made by the Internal Revenue Service, the Kentucky Revenue Cabinet, or other tax authorities on the same worker. Determinations by these other agencies are not binding on the division. Furthermore, IRS "SAFE HARBOR" exemptions DO NOT apply to determinations made by the division.

RULE FOR INDEPENDENT CONTRACTORS

Kentucky does not have a statutory definition of “independent contractor.”

Kentucky follows the common law rule.

Applicable Cases

  • Uninsured Employers’ Fund v. Garland (805 S.W.2d 116).  “The proper legal analysis for determining whether a claimant worker is an independent contractor under worker’s compensation laws requires consideration of four predominant factors: (1) the nature of the work as related to the business carried on by the alleged employer; (2) the extent of control exercised by the alleged employer, (3) the professional skill of the alleged employee, and (4) the true intent of the parties.

 

LOUISIANA

LAW

Louisiana Revised Statutes 23:302

(1) “Employee” means an individual employed by an employer.

(2) “Employer” means a person, association, legal or commercial entity, the state, or any state agency, board, commission, or political subdivision of the state receiving services from an employee and, in return, giving compensation of any kind to an employee…

Louisiana Revised Statutes 23:1472

(12)A. "Employment" means, subject to the other provisions of this subsection, any services including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied;

*****

RULE FOR INDEPENDENT CONTRACTORS

Louisiana DOES have a statutory definition of “independent contractor.”

LSA-R.S. 23:1021

(7) “Independent contractor” means any person who renders service, other than manual labor, for a specified recompense for a specific result either as a unit or as a whole, under the control of his principal as to results of his work only, and not as to the means by which such result is accomplished, and are expressly excluded from the provision of this Chapter unless a substantial part of the work time of an independent contractor is spent in manual labor by him in carrying out the terms of the contract, in which case the independent contractor is expressly covered by the provision of this Chapter.

*****

Kentucky follows the ABC rule.

LSA-RS 23:1472

E. Services performed by an individual for wages or under any contract of hire, written or oral, express or implied, shall be deemed to be employment subject to this Chapter unless and until it is shown to the satisfaction of the administrator that;

I. such individual has been and will continue to be free from any control or direction over the performance of such services both under his contract and in fact; and

II. such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

III. such individual is customarily engaged in an independently established trade, occupation, profession or business;

Applicable Cases

  • Course v. Fox Wolff Const. (987 So.2d 277).  “The most important element in determining whether a worker is an employee or an independent contractor, for purposes of workers’ compensation coverage, is the right of control and supervision, rather than actual control and supervision, over an individual.”

 

MAINE

LAW

39-A M.R.S.A § 102

11.A.  “Employee” includes officials o the State and officials of counties, cities, towns, water districts and all other quasi-public corporations of a similar character, every duly elected or appointed executive officer of a private corporation other than a charitable, religious, educational or other nonprofit corporation, and every person in the service of another under any contract of hire, express or implied, oral or written…

RULE FOR INDEPENDENT CONTRACTORS

Maine DOES have a statutory definition of “independent contractor.”

39-A M.R.S.A § 102

 (13) Except as otherwise provided by section 105-A, “independent contractor” means a person who performs services for another under contract, but who is not under the essential control or superintendence of the other person while performing those services. In determining whether such a relationship exists, the board shall consider the following factors:

A. Whether or not a contract exists for the person to perform a certain piece or kind of work at a fixed price;

B. Whether or not the person employs assistants with the right to supervise their activities;

C. Whether or not the person has an obligation to furnish any necessary tools, supplies and materials;

D. Whether or not the person has the right to control the progress of the work, except as to final results;

E. Whether or not the work is part of the regular business of the employer;

F. Whether or not the person's business or occupation is typically of an independent nature;

G. The amount of time for which the person is employed; and

H. The method of payment, whether by time or by job.

In applying these factors, the board may not give any particular factor a greater weight than any other factor, nor may the existence or absence of any one factor be decisive. The board shall consider the totality of the relationship in determining whether an employer exercises essential control or superintendence of the person.

*****

Maine follows the A, and B or C rule.

26 M.R.S.A. § 1043

11. A. The term "employment" shall include an individual's entire service, performed within or both within and without this State if: 

E. Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the bureau that the individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact, and:

(1) Deleted.

(2) Such service is either outside the usual course of the business for which such

service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; OR

(3) Such individual is customarily engaged in an independently established trade, occupation, profession or business.

 

MARYLAND

LAW

MD Code Labor and Employment § 8-101

(l) "Covered employment" means work that an individual performs for an employing unit that is the basis for benefits.

REGULATIONS

Code of Maryland Regulations, Sec. 09.32.01.18  

A. Employee. A person performing services is presumed to be an employee, regardless of whether a common law master and servant relationship exists, unless specifically Exempted under the Unemployment Insurance Law or these regulations.

B. Independent Contractor

(1) To overcome the employee presumption, an employing unit shall establish that the person performing services is an independent contractor.

(2) The Secretary shall determine that an employing unit has established that the person performing services is an independent contractor when the conditions in §B(3)(a)-----(c) of this regulation are clearly shown.

(3) Circumstances evidencing the conditions mentioned in §B(2) of this regulation include, but are not limited to, the items listed after each condition:

(a) The person has been and will continue to be free from the employing unit's control or direction:

(i) The employing unit does not require the person to comply with detailed instructions about when, where, and how the person is to work,

(ii) The employing unit does not train the person to perform the service in a particular manner or using a particular method determined by the employing unit,

(iii) The employing unit does not establish set hours of work for the person performing the services,

(iv) The employing unit does not establish a schedule or routine for the person performing the service,

(v) The employing unit may not discharge the person for failure to obey the employing unit's specific instructions on how the service is to be performed;

(b) The service is outside the usual course of business of the employing unit:

(i) The person performs the work off the employing unit's premises,

(ii) The person performs work that is not integrated into the employing unit's operation,

(iii) The service performed is unrelated to the employing unit's business;

(c) The person performing the service is customarily engaged in an independently established business:

(i) Maintains a business listing in the telephone directory,

(ii) Has his or her own place of business,

(iii) Has a financial investment in a related business and can incur a loss in the performance of the service,

(iv) Has his or her own equipment needed to perform the service,

(v) Determines the price of the service to be performed,

(vi) Employs others to perform the service,

(vii) Carries his or her own liability or workers' compensation insurance, or both,

(viii) Performs the service for more than one unrelated employer at the same time,

(ix) Sets his or her own hours,

(x) Is paid by the job.

RULE FOR INDEPENDENT CONTRACTORS

Maryland does not have a statutory definition of “independent contractor.”

Maryland follows the ABC rule.

MD Code Labor and Employment § 8-205

(a) Work than an individual performs under any contract of hire is not covered employment if the Secretary is satisfied that:

(1) the individual who person the work is free from control and direction over tis performance both in fact and under the contract;

(2) the individual customarily is engaged in an independent business or occupation of the same nature as that involved in the work; and

(3) the work is:

(i) Outside of the usual course of business of the person for whom the work is performed; or

(ii) performed outside of any place of business of the person for whom the work is performed.

Applicable Cases

  • William J. Burns Intern. Detective Agency, Inc. v. Ferris (16 Md.App. 568). “The words “employer” and “employee” as they appear in the Workmen’s Compensation Act are equivalent of and synonymous with the words “master” and “servant,” and therefore the rules for determining existence of the relation of employer and employee under the Act are the same as the common-law rules for ascertaining the relation of master and servant.”   

 

MASSACHUSETTS

LAW

M.G.L.A. 152 § 1

(4) “Employee”, every person in the service of another under any contract of hire, express or implied, oral or written…

RULE FOR INDEPENDENT CONTRACTORS

Massachusetts does not have a statutory definition of “independent contractor.”

Massachusetts follows the ABC rule.

M.G.L.A 151A § 2

Service performed by an individual, except in such cases as the context of this chapter otherwise requires, shall be deemed to be employment subject to this chapter irrespective of whether the common-law relationship of master and servant exists, unless and until it is shown to the satisfaction of the commissioner that--

(a) such individual has been and will continue to be free from control and direction in connection with the performance of such services, both under his contract for the performance of service and in fact; and

(b) such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

(c) such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

 

MICHIGAN

LAW

M.C.L.A.§ 421.42

(1) “Employment” means service, including service in interstate commerce, performed for remuneration or under any contract of hire, written or oral, express or implied. . . . .

*   *   *   *   *   *

(5) Services performed by an individual for remuneration shall not be deemed to be employment subject to this act, unless the individual is under the employer's control or direction as to the performance of the services both under a contract for hire and in fact.

Service performed by an individual for remuneration under an exclusive contract which provides for the individual's control and direction by a person, firm, or corporation possessing a public service permit or by a certificated motor carrier transporting goods or property for hire shall be deemed employment subject to this act. Service performed by an individual who by lease, contract, or arrangement places at the disposal of a person, firm, or corporation a piece of motor vehicle equipment and under a contract of hire, which provides for the individual's control and direction, is engaged by the person, firm, or corporation to operate the motor vehicle equipment shall be deemed to be employment subject to this act.

RULE FOR INDEPENDENT CONTRACTORS

Michigan does not have a statutory definition of “independent contractor.”

Michigan follows the common law rule.

Applicable Cases

  • Buckley v. Professional Plaza Clinic Corp. (761 N.W.2d 284). “The economic reality test for determining whether a worker is an employee or independent contractor, for purpose of determining whether worker may recover unpaid wages under the Payment of Wages and Fringe Benefits Act, takes into account the totality of the circumstances around the work performed, with an emphasis on the following factors:  (1) the control of a worker’s duties, (2) the payment of wages, (3) the right to hire and fire and the right tot discipline, and (4) the performance of the duties as an integral part of the employer’s business towards the accomplishment of a common goal.”

 

MINNESOTA

LAW

Minn. Stat. Ann. § 268-035

*****

Subd. 13.  Employee. "Employee" means every individual, who is performing, or has performed services for an employer in employment.

*****

Subd. 15. Employment. "Employment" means service performed by:

(1) an individual who is considered an employee under the common law of employer employee and not considered an independent contractor;

REGULATIONS

Minnesota Rules, part 3315.0555

3315.0555 DETERMINING WORKER STATUS.

Subpart 1. Essential factors. When determining whether an individual is an employee or an independent contractor, five essential factors must be considered and weighed within a particular set of circumstances. Of the five essential factors to be considered, the two most important are those:

A. that indicate the right or the lack of the right to control the means and manner of performance; and

B. to discharge the worker without incurring liability. Other essential factors to be considered and weighed within the overall relationship are the mode of payment; furnishing of materials and tools; and control over the premises where the services are performed.

Other factors, including some not specifically identified in this part, may be considered if a determination is inconclusive when applying the essential factors, and the degree of their importance may vary depending upon the occupation or work situation being considered and why the factor is present in the particular situation.

Subp. 2. Additional factors considered. Additional factors to be considered are those listed in items A to H.

A. Availability to public. That an individual makes services available to the general public on a continuing basis is usually indicative of independent status. An individual may offer services to the public in a number of ways including having an office and assistants, displaying a sign in front of the home or office, holding a business license, having a listing in a business directory or a business listing in a telephone directory, or advertising in a newspaper, trade journal, or magazine.

B. Compensation on job basis. A person working in employment is usually paid by the hour, week, or month. Payment on a job basis is customary where the worker is independent. Payment by the job may include a predetermined lump sum which is computed by the number of hours required to do the job at a fixed rate per hour or periodic partial payments based upon a percent of the total job price or the amount of the total job completed. The guarantee of a minimum salary or the granting of a drawing account at stated intervals with no requirement for repayment of the excess over earnings indicates the existence of employment.

C. Realization of profit or loss. An individual who is in a position to realize a profit or suffer a loss as a result of the individual's services is generally independent, while the individual who is working in employment is not in that position.

D. Obligation. An individual working in employment usually has the right to end the relationship with an employer at any time the individual wishes without incurring liability, although the individual may be required to provide notice of termination for some period in advance of the termination. An independent worker usually agrees to complete a specific job. An independent worker is responsible for its satisfactory completion and is liable for failure to complete the job.

E. Substantial investment. A substantial investment by a person in facilities used by the person in performing services for another tends to show an independent status. The furnishing of all necessary facilities by the employing unit tends to indicate the absence of an independent status. Facilities include equipment or premises necessary for the work, but not tools, instruments, clothing, and similar items that are provided by individuals working in employment as a common practice in their particular trade. A substantial expenditure of time or money for an individual's education is not necessarily indicative of an independent relationship. Substantial investment means a monetary investment representing something of considerable worth, in relation to the overall requirements of the person's chosen profession, trade, occupation, or vocation.

F. Simultaneous contracts. If an individual works for a number of persons or firms at the same time, it indicates an independent status because the worker is usually free from control by any of the firms. It is possible that a person may work for a number of people or firms and still be an employee of one or all of them.

G. Responsibility. An employing unit is usually responsible for the negligence, personal behavior, and work actions of a person working in employment in contacts with customers and the general public during times that the person is performing services for the employing unit. An independent worker is usually accountable for his or her own actions.

H. Services in the course of the employing unit's organization, trade, or business. Services that are in the course of the employing unit's organization, trade, or business consist of services which are a part or process of the employing unit's organization, trade, or business and ancillary or incidental services. Services which are a part or process of the employing unit's trade or business are generally performed by individuals in employment. Therefore, it is a consideration in determining the status of an individual.

This consideration, as with all other considerations, is not a sole determinative factor.

Subp. 3. Determination of control. Items A to M describe criteria for determining if the employing unit has control over the method of performing or executing services. The total circumstances must be considered to determine if control is present.

A. Authority over assistants. Control over the individual is indicated when the employing unit hires and pays the individual's assistants and supervises the details of the assistant's work.

B. Compliance with instructions. Control is indicated when an individual is required to comply with detailed instructions about when, where, and how to work including the order or sequence in which the service is to be performed. Mere suggestions as to detail or necessary and usual cooperation where the work furnished is part of a larger undertaking, does not normally evince control. Some individuals may work without receiving instructions because they are highly proficient in their line of work; nevertheless, the control factor is present if the employing unit has the right to instruct or direct the methods for doing the work and the results achieved. Instructions may be oral or may be in the form of manuals or written procedures which show how the desired result is to be accomplished. However, instructions required by state or federal law or regulation or general instructions passed on by the employing unit from a client or customer, generally does not evince control.

C.  Oral or written reports. Control is indicated if regular oral or written reports relating to the method in which the services are performed must be submitted to the employing unit. Periodic reports relating to the accomplishment of a specific result may not be indicative of control if, for example, the reports are used to establish entitlement to partial payment based upon percentage of completion of a job, or the reports are needed to determine compliance with the terms of a contract. Completion of receipts, invoices, and other forms customarily used in the particular type of business activity or required by law does not constitute written reports.

D. Place of work. Doing the work on the employing unit's premises is not control in itself; however, it does imply that the employer has control, especially when the work could be done elsewhere. When work is done off the premises it does indicate some freedom from control; however, in some occupations, the services are necessarily performed away from the premises of the employing unit and are still considered to be in employment.

E. Personal performance. Control is indicated if the services must be personally rendered to the employing unit. Personal performance of a very specialized work, when the worker is hired on the basis of professional reputation, as in the case of a consultant known in the academic and professional circles to be an authority in the field, is a less reliable indicator of control. Lack of control may be indicated when an individual has the right to hire a substitute without the employing unit's knowledge or consent.

F. Existence of a continuing relationship. The existence of a continuing relationship between an individual and the person for whom an individual performs services is a factor tending to indicate the existence of an employer-employee relationship. Continuing services may include work performed at frequently recurring, though somewhat irregular intervals, either on call of the employing unit or whenever work is available.

G. Right to discharge. The right to discharge is a very important factor indicating that the right to control exists particularly if the individual may be terminated with little notice, without cause, or for failure to follow specified rules or methods. An independent worker generally cannot be terminated without the firm being liable for damages if he or she is producing according to his or her contract specifications. Contracts which provide for termination upon notice or for specified acts of nonperformance or default are not solely determinative of the right to control. That a right to discharge is restricted because of a contract with a labor union or with other entities does not mean there is no control.

H. Set hours of work. The establishment of set hours of work by the employing unit indicates control. Where fixed hours are not practical because of the nature of the occupation, a requirement that the worker work at certain times is an element of control.

I. Training. Training of an individual by an experienced employee working with the individual, by required attendance at meetings, and by other methods, is a factor of control especially if the training is given periodically or at frequent intervals.

J. Amount of time. If the worker must devote full time to the activity, control is indicated. Full time does not necessarily mean an eight-hour day or a five- or six-day week. Its meaning may vary with the intent of the parties, the nature of the occupation and customs in the locality. Full-time services may be required even though not specified in writing or orally. For example, a person may be required to produce a minimum volume of business which compels the person to devote all working time to that business, or the person may not be permitted to work for anyone else.

K. Tools and materials. The furnishing of tools, materials, and supplies by the employing unit is indicative of control over the worker. When the worker furnishes these items it indicates a lack of control, but lack of control is not indicated if the individual provides tools or supplies customarily furnished by workers in the trade.

L. Expense reimbursement. Payment by the employing unit of either the worker's approved business or traveling expenses, or both, is a factor indicating control over the worker. A lack of control is indicated when the worker is paid on a job basis and has to take care of all incidental expenses.

M. Satisfying requirements of regulatory and licensing agencies. If an employing unit is required to enforce standards or restrictions imposed by regulatory or licensing agencies, such action does not evince control.

Subp. 4. Procedures for determining control. The department shall determine if control exists by:

A. reviewing written contracts between the individual and the employing unit;

B. interviewing the individual or employing unit;

C. obtaining statements of third parties;

D. examining regulatory statutes governing the organization, trade, or business;

E. examining the books and records of the employing unit; and70

F. making any other investigation necessary to determine if the elements of control specified in subpart 3 exist.

Subp. 5. Obtaining a determination or opinion. If an employing unit is unsure of the status of an individual performing services for it, the employing unit may obtain a written determination by submitting all relevant facts to the commissioner on questionnaires prescribed for these determinations. The determination shall be final unless a written protest is filed with the commissioner as set forth in Minnesota Statutes, section 268.12, subdivision. If any person contemplates hiring or engaging a worker to perform services and is unsure if the services would be deemed employment, a written opinion may be obtained by submitting information about the proposed work arrangement, as the hiring person perceives it will be, on questionnaires prescribed by the commissioner. The commissioner's opinion does not have the effect of a determination and is not subject to appeal. The person requesting the opinion shall clearly indicate that the situation is hypothetical and that an opinion, rather than a determination, is being sought. If an individual is hired or engaged to perform the services in question, a determination may be obtained.

RULE FOR INDEPENDENT CONTRACTORS

Minnesota does not have a statutory definition of “independent contractor.”

Minnesota follows the Common Law rule.

Indicia of control to determine if worker is an employee are set forth above by Regulations stated above. 

 

MISSISSIPPI

LAW

Miss. Code Ann. § 71-3-3

(d) “Employee” means any person, including a minor whether lawfully or unlawfully employed, in the service of an employer under any contract of hire or apprenticeship, written or oral, express or implied, provided that there shall be excluded therefrom all independent contractors…

Miss. Code Ann. § 71-5-11

I. "Employment" means and includes: 

(1) Any service performed, which was employment as defined in this section and, subject to the other provisions of this subsection, including service  in interstate commerce, performed for wages or under any contract of hire,  written or oral, express or implied. 

 *****

(13) Service with respect to which a tax is required to be paid under any federal law imposing a tax against which credit may be taken for contributions required to be paid into a state unemployment fund, or which as a condition for full tax credit against the tax Imposed by the Federal  Unemployment Tax Act, 26 USCS Section 3301 et seq., is required to be  covered under this chapter, notwithstanding any other provisions of this subsection. 

(14) Services performed by an individual for wages shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the commission that such individual has been and will continue to be free from control and direction over the performance of such services both under his contract of service and in fact; and the relationship of employer and employee shall be determined in accordance with the principles of the common law governing the relation of master and servant. 

REGULATIONS

Code Miss. R. 38 000 006

TR-11. Independent contractors

The Law provides that the relationship of employer and employee shall be determined in accordance with the principles of the common law governing the relation of master and servant. Generally, the relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done, but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer are the furnishing of tools and the furnishing of a place to work to the individual who performs the service. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is an independent contractor, not an employee.  If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus, if two individuals in fact stand in relation of employer and employee to each other, it is of no consequence that the employee is designated as a partner, co-adventurer, agent, or independent contractor. The measurement, method, or designation of compensation is also immaterial, if the relationship of employer and employee in fact exists. Generally, physicians, lawyers, dentists, veterinarians, contractors, sub- contractors, public stenographers, auctioneers, and others who follow an independent trade, business or profession, in which they offer their services to the public, are independent contractors and not employees. Whether or not persons performing services, directly or indirectly, for an employing unit are employees depends upon the particular facts in each case. No single test is conclusive and every employing unit claiming the existence of a relationship other than that of employer employee shall make application to the Commission for determination of its status and shall furnish to the Commission a full and complete statement of all facts concerning its relationship with the person claimed to be an independent contractor, together with a copy of any contract existing between them. All persons performing services for any employing unit shall be deemed employees unless and until this rule shall have been complied with and their status shall have been otherwise determined by the Commission. After a decision has been made by the Commission relative to the employer-employee relationship, the employer will be notified in writing the mail. The employer has, within ten days from the mailing date of this decision, the right to protest the decision and request  a hearing before the Commission, as provided in Section 71-5-355 (2)(b)(ix).

TR-12.

Any employing unit which contracts with or has under it any contractor or sub- contractor for any employment which it claims is not part of its usual trade, occupation, profession or business shall submit to the Commission a complete, detailed written statement of facts in support of such claim. No such claim shall be recognized until and unless) the Commission is satisfied of its validity and correctness.

TR-13.

Contractors and sub-contractors must be reported.

Whenever and as an employing unit contracts with or has under it any contractor or subcontractor for any employment which is part of its usual trade, occupation, profession or business, such employing unit may be required to furnish in writing to the Commission:

(a)  the name and address of each such contractor or sub-contractor,

(b)  the date of commencement of the work under such contract,73

(c)  the place or places at which the work is to be performed,

(d)  whether such contractor or sub-contractor is registered as an employer under the Employment Security Law and,

(e) if registered, his registration number.

 . . .

TR-16.  Employed individuals

An individual is in the employment or employ of another within the meaning of the Law if he performs service, including service in interstate commerce, for such other, for wages or under any contract of hire, written or oral, expressed or implied. The relationship between the individual who performs such service and the person for whom such service is rendered must, however, as to such service, be the legal relationship of employer and employee. The Law makes no distinction between classes or grades of employees. Thus superintendents, managers, and other superior employees are employees within the meaning of the Law. The words "employ", "employer,” and "employee”, as used herein, are to be taken in their ordinary meaning. An employer, however, may be an individual, a corporation, a partnership, trust, or estate, association, joint-stock company, insurance company, or corporation, whether domestic or foreign, syndicate group, pool, joint adventure, or other unincorporated organization, group or entity. An employer may be a person acting in a fiduciary capacity or on behalf of another, such as a guardian, committee, trustee, executor or administrator, trustee in bankruptcy, receiver, assignee for the benefit of creditors, or conservator. Whether the relationship of employer and employee exists, will in doubtful cases be determined upon examination of the particular facts of each case.

RULE FOR INDEPENDENT CONTRACTORS

Mississippi DOES have a statutory definition of “independent contractor.”

Miss. Code Ann. § 71-3-3

(r) “Independent contractor” means any individual, firm or corporation who contracts to do a piece of work according to his own methods without being subject to the control of his employer except as to the results of the work, and who has the right to employ and direct the outcome of the workers independent of the employer and free rom any superior authority in the employer to say how the specified work shall be done or what the laborers shall do as the work progresses, one who undertakes to produce a given result without being in any way controlled as to the methods by which he attain the result.

Mississippi follows the Common Law rule.

Indicia of control to determine if worker is an employee are set forth above by Regulations stated above. 

Applicable Cases:

  • White Top and Safeway Cab Co. Wright (251 Miss. 830). “Tests in analyzing employee-independent contractor question in workmen’s compensation case are control test and relative nature of work test; latter relates to character of claimant’s work or business and relation thereof to employer’s business.”
  • Mississippi Employment Sec. Com’n v. Total Care (586 So.2d 834). “For purposes of unemployment tax contribution, test for whether worker is an employee or an independent contractor is the level of control the employer has over the worker’s work activities.

 

MISSOURI

LAW

Missouri Revised Statutes § 288.034

1.    "Employment" means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied, and notwithstanding any other provisions of this section, service with respect to which a tax is required to be paid under any federal unemployment tax law imposing a tax against which credit may be taken for contributions required to be paid into a state unemployment fund or which, as a condition for full tax credit against the tax imposed by the Federal Unemployment Tax Act, is required to be covered under this law.

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5.  Service performed by an individual for remuneration shall be deemed to be employment subject to this law unless it is shown to the satisfaction of the division that such services were performed by an independent contractor. In determining the existence of the independent contractor relationship, the common law of agency right to control shall be applied. The common law of agency right to control test shall include but not be limited to: if the alleged employer retains the right to control the manner and means by which the results are to be accomplished, the individual who performs the service is an employee. If only the results are controlled, the individual performing the service is an independent contractor.

RULE FOR INDEPENDENT CONTRACTORS

Missouri does not have a statutory definition of “independent contractor.”

Mississippi follows the Common Law rule.

Applicable Cases:

  • Merick Trucking, Inc. v. Missouri Div. of Employment Sec., Labor and Indus. Relations Com’n of Missouri (902 S.W.2d 871). “Common law definition of independent contractor for purpose of unemployment compensation, is one who, exercising an independent employment, contracts to do piecework, according to his or her own methods, and without being subject to control of employer except as to result of work.”

 

MONTANA

LAW

Mont. Code Ann. § 39-51-203.

(1) "Employment", subject to other provisions of this section, means service by an individual, by a manager or member of a manager-managed limited liability company that ha s filed with the secretary of state, or by an officer of a corporation, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied.

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(4)  Service performed by an individual for wages is considered to be employment subject to this chapter until it is shown to the satisfaction of the department that the individual is an independent contractor.

REGULATIONS

Mont. Admin. R. 24.35.302

(1) An individual is an employee and not an independent contractor if the hiring agent controls or retains the right to control the way the individual renders services. The following factors must be considered to determine whether control exists:

(a)   The individual is required to follow written or oral instructions concerning when, where, or how work is to be done. Although some individuals, because of skill or expertise, work without receiving instructions, they may still be employees if the employer has the right to give instructions on work performance;

(b)  The success or continuation of a business depends in great part upon the services performed by the individual;

(c)   The hiring agent directs the hiring, supervising, or payment of the individual's assistants;

(d)  The relationship between the individual and the hiring agent is on a frequent, recurring basis, even if irregular or part time;

(e)  The individual is required to perform services at certain established times;

(f)  The work is performed on the business premises of the hiring agent. This factor is especially important if the work could be performed elsewhere;

(g)  The hiring agent requires, or has the right to require, the individual to perform services in a certain manner, or in a certain order or sequence;

(h)  The hiring agent requires the individual to submit oral or written reports;

(i)   The individual is paid based on the time spent doing the work rather than a flat fee;

(j)  The individual is paid or reimbursed for travel or other business-related expenses;

(k)  The hiring agent furnishes the facilities, tools, materials or other equipment to the individual;

(l)  The individual may be discharged at the will of the hiring agent, including the right to discharge for the failure to follow specified rules or methods. A union contract or statute which restricts the right of discharge does not indicate a lack of control;

(m)  Training is provided to the individual by the hiring agent;

(n)  The individual does not realize a profit or suffer a loss as a result of the services performed; or

(o)  The individual is prohibited or restricted from working for others or is required to devote primary attention to the hiring agent.

(2)   The above factors are weighed and evaluated depending on the circumstance of each case. A combination of these factors may indicate control or the right to control. Service performed by an individual for pay is considered to be employment until it is shown to the satisfaction of the department that the individual is an independent contractor.

RULE FOR INDEPENDENT CONTRACTORS

Montana DOES have a statutory definition of “independent contractor.”

Mont. Code Ann. § 39-51-201

(15) “Independent contractor” means an individual working under an independent contractor exemption certificate provided for in 39-71-417.

Monta. Code Ann. § 39-7-417

To obtain an independent contractor exemption certification, the applicant shall swear to and acknowledge the following:

(i) that the applicant has been and will continue to be free from control or direction over the performance of the person’s own services, both under contract and in fact; and

(ii) that the applicant is engaged in an independently established trade, occupation, profession, or business and will provide sufficient documentation of that fact to the department.

Montana follows the Common Law rule.

Indicia of control to determine if worker is an employee are set forth above by Regulations stated above. 

Applicable Cases:

  • Phoenix Physical Therapy v. Unemployment Ins. Div., Contributions Bureau(943 P.2d 523).
    • “Determining factor, in distinguishing between employee and independent contractor, for unemployment compensation purposes, is element of control; for individual to be independent contractor, he or she must be free from control or direction over performance of his or her services.” 
  • “Court considers four factors in deciding whether right to control exists, of kind sufficient to disqualify individual as independent contractor for unemployment compensation purposes: (1) direct evidence of right or exercise of control; (2) method of payment; (3) furnishing of equipment; and (4) right to fire.”

 

NEBRASKA

LAW

Nebraska Revised Statutes § 48-604

As used in the Employment Security Law, unless the context otherwise requires, employment shall mean:

(1)   Any   service  performed  after  June  30,  1941, including service in  interstate  commerce,  for  wages  under  a contract of hire, written or oral, express or implied;

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RULE FOR INDEPENDENT CONTRACTORS

Nebraska does not have a statutory definition of “independent contractor.”

Nebraska follows the ABC rule.

Nebraska Revised Statutes § 48-604

(5)   Services  performed  by  an  individual for wages, including wages received under  a  contract  of  hire,  shall  be deemed to be employment unless it is shown to the satisfaction of the  commissioner  that 

(a)  such  individual  has been and will continue   to   be  free  from  control  or  direction  over  the performance of such services, both under his or her  contract  of service and in fact,

(b) such service is either outside the usual course  of  the  business  for which such service is performed or such service is performed outside of all the places  of  business of  the  enterprise  for which such service is performed, and

(c) such  individual  is  customarily  engaged  in  an  independently established  trade,  occupation,  profession,  or business.   The provisions  of  this  subdivision  are  not  intended  to  be   a codification  of  the common law and shall be considered complete as written.

Applicable Cases:

  • Wilds v. Morehouse (152 Neb. 749) “An independent contractor is one who renders a service in course of an independent occupation, representing will of his employer only as to result of work, and not as to means by which it is accomplished.”
  • Stroll v. School Dist. (no.1) of Lincoln in Lancaster County (207 Neb. 670).  “An employer has the right to control, supervise, and direct the manner in which his employees work; an independent contractor is generally subject to his cocontractor’s control only for directions sufficient to insure that their contract will be met.”

 

NEVADA

LAW

NRS § 612.065

Subject to the provisions of NRS 612.070 to 612.145, inclusive, “employment” means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied.

NRS § 606.603

1.  A person is not an employer… if:

(a) The person enters into a contract with another person or business which is an independent enterprise; and

(b) The person is not in the same trade, business, profession or occupation as the independent enterprise.

RULE FOR INDEPENDENT CONTRACTORS

Nevada DOES have a statutory definition of “independent contractor.”

NRA 616B.603. “Independent enterprise”

2. …Independent enterprise means a person who holds himself or herself out as being engaged in a separate business and:

(a) Holds a business or occupational license in his or her own name; or

(b) Owns, rents or leases property used in furtherance of the business.

NRS 617.120 “Independent contractor” means any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished. 

Nevada follows the common law rule.

Applicable Cases:

  • Willison v. Texaco Refining and Marketing, Inc., (848 P.2d 1062). “There are five factors in determining whether putative employer has exercised enough control over person to establish employer/employee relationship under Nevada Industrial Insurance Act; degree of supervision exercised by putative employer over details of work; source of worker’s wages; existence of right on part of putative employer to hire and fire worker; extent to which worker’s activities further general business concerns of putative employers; and putative employer’s right to control hours and location of employment.”

 

NEW HAMPSHIRE

LAW

N.H. Rev. Stat. § 275-E:1

I.  "Employee" means and includes every person who may be permitted, required, or directed by any employer, in consideration of direct or indirect gain or profit, to engage in any employment, but shall not include any person exempted from the definition of employee as stated in RSA 281-A:2, VI(b)(2), (3), or (4), or RSA 281-A:2, VII(b), or a person providing services as part of a residential placement for individuals with developmental, acquired, or emotional disabilities, or any person who meets all of the following criteria:

(a)  The person possesses or has applied for a federal employer identification number or social security number, or in the alternative, has agreed in writing to carry out the responsibilities imposed on employers under this chapter.

(b)  The person has control and discretion over the means and manner of performance of the work, in that the result of the work, rather than the means or manner by which the work is performed, is the primary element bargained for by the employer.

(c)  The person has control over the time when the work is performed, and the time of performance is not dictated by the employer. However, this shall not prohibit the employer from reaching an agreement with the person as to completion schedule, range of work hours, and maximum number of work hours to be provided by the person, and in the case of entertainment, the time such entertainment is to be presented.

(d)  The person hires and pays the person's assistants, if any, and to the extent such assistants are employees, supervises the details of the assistants' work.

(e)  The person holds himself or herself out to be in business for himself or herself.

(f)  The person has continuing or recurring business liabilities or obligations.

(g)  The success or failure of the person's business depends on the relationship of business receipts to expenditures.

(h)  The person receives compensation for work or services performed and remuneration is not determined unilaterally by the hiring party.

(i)  The person is responsible in the first instance for the main expenses related to the service or work performed. However, this shall not prohibit the employer or person offering work from providing the supplies or materials necessary to perform the work.

(j)  The person is responsible for satisfactory completion of work and may be held contractually responsible for failure to complete the work.

(k)  The person supplies the principal tools and instrumentalities used in the work, except that the employer may furnish tools or instrumentalities that are unique to the employer's special requirements or are located on the employer's premises.

(l)  The person is not required to work exclusively for the employer.

REGULATIONS

N.H. Code Admin. R. Emp. § 503.04

(a)   For purposes of RSA 282-A:32, III [re disqualification for benefits due to leaving self-employment or closing a business], an individual shall be considered to have been previously self-employed or to have had a business if, as to an entity or activity 3 or more of the following are true:

(1)  The individual was a sole proprietor, partner, officer or director, both in name and in fact;

(2) The individual had an investment or was a stockholder;

(3) The individual formed the entity or became involved in the activity in order to create profits, which for purposes of this clause shall include wages, capital gains, dividends, salaries, commissions, bonuses, board, rent, housing, payment in kind, insurance, disability plans, retirement and similar advantages, and benefits;

(4) The individual controlled or had the right to control;

(5) The individual had a spouse, parent, child, brother, sister or step family member of the same relationship who was either an officer, manager, director, investor, stockholder or partner, who controlled or who had the express or implied right to control, and said family member either acceded to the decisions of the individual or delegated rights or authority to the individual; or

(6) The individual performed services not required to be done by an officer or director.

RULE FOR INDEPENDENT CONTRACTORS

New Hampshire does not have a statutory definition of “independent contractor.”

New Hampshire follows the ABC rule.

New Hampshire Revised Statutes § 282-A:9

I.  "Employment'' means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, expressed or implied, together with service performed within the state which constitutes "employment'' under the provisions of the Federal Unemployment Tax Act.

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III.   Services performed by an individual for wages shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the commissioner of the department of employment security that:

(a)  Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and

(b)   Such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(c)   Such individual is customarily engaged in an independently established trade, occupation, profession, or business.

 

NEW JERSEY

LAW

New Jersey Statutes Annotated 34:15-36

“Employer” is declared to be synonymous with master, and includes natural persons, partnerships, and corporations; “employee” is synonymous with servant, and includes all natural person, including officer of corporation, who perform service for an employer for financial consideration….

RULE FOR INDEPENDENT CONTRACTORS

New Jersey does not have a statutory definition of “independent contractor.”

New Jersey follows the ABC rule.

New Jersey Statutes 43:21-19

(i) (1) "Employment" means:

(A)  Any service performed prior to January 1, 1972, which was employment as defined in the "unemployment compensation law" (R.S. 43:21-1 et seq.) prior to such date, and, subject to the other provisions of this subsection, service performed on or after January 1, 1972, including service in interstate commerce, performed for remuneration or under any contract of hire, written or oral, express or implied.

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(6) Services performed by an individual for remuneration shall be deemed to be employment subject to this chapter (R.S.43:21-1 et seq.) unless and until it is shown to the satisfaction of the division that:

(A)   Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and

(B)    Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(C)     Such individual is customarily engaged in an independently established trade, occupation, profession or business.

Applicable Cases:

  • DeMonaco v. Renton (113 A.2d 782). “Determinative factor as to whether person is employee or independent contractor for purposes of workmen’s compensation is control, and relationship of master and servant exists whenever employer retains right to determine not only what shall be done, but how it shall be done.”
  • Conley v. Oliver and Co. (721 A.2d 1007). “‘Right to control’ and ‘relative nature of the work’ tests as used to determine whether a person is an employee or an independent contractor for purposes of the Workers’ Compensation Act, are basically designed to draw a distinction between those occupations which are properly characterized as separate enterprises and those which are in fact an integral part of he employer’s regular business.”
  • Id. “Right to control test… may be satisfied even though the employer does not control the details of an employee’s performance of his or her work; requirement of control is sufficiently met where its extent is commensurate with the degree of supervision which is necessary and appropriate, considering the type of work to be done and the capabilities of the particular person doing it.”
  • Re/Max of New Jersey, Inc. v. Wausau Ins. Companies (304 N.J.Super. 59). “Under relative nature of work test…determinative criteria are not inclusive details of arrangement between parties, but extent of economic dependence of individual upon business he serves and relationship of nature of his work to operation of business; critical focus is individual’s degree of independence and whether his work is integral part of regular business of someone else.”

 

NEW MEXICO

LAW

N.M.S.A. § 50-4-21

A. “Employ” includes suffer or permit to work;

B. “Employer” includes any individual, partnership, association, corporation, business, trust, legal representative or any organized group of persons employing one or more employees at any one time, acting directly or indirectly in the interest of an employer in relation to an employee….

C. “Employee” includes an individual employed by an employer…

RULE FOR INDEPENDENT CONTRACTORS

New Mexico does not have a statutory definition of “independent contractor.”

New Mexico follows the ABC rule.

New Mexico Statutes § 51-1-42

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F. "Employment":

(1) means any service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied;

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 (5) means services performed by an individual for an employer for wages or other remuneration unless and until it is established by a preponderance of evidence that:

(a) the individual has been and will continue to be free from control or direction over the performance of the services both under the individual's contract of service and in fact;

(b) the service is either outside the usual course of business for which the service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(c) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the contract of

service.

Applicable Cases:

  • Benavidez v. Sierra Blanca Motors(907 P.2d 1018). 
    • “In determining whether worker is an independent contractor, four factors tend to establish right to control: (1) direct evidence of right or exercise of control; (2) method of payment; (3) furnishing of equipment; and (4) right to fire.
  • “In determining whether work was an independent contractor excluded from coverage under workers’ compensation casual employment provision, court must analyze first whether contractor meets “right to control test” and if that test indicates independence on part of contractor, court must apply “relative nature” test.”

 

NEW YORK

LAW

New York Labor Law § 511

 1. General definition. "Employment" means (a) any service under any contract of employment for hire, express or implied, written, or oral and

(b) any service by a person for an employer

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ADMINISTRATIVE PUBLICATION

Independent Contractors

Understanding the distinction between independent contractors and employees could be vital for you and your business. You may genuinely believe that you have engaged individuals to perform services for you as  independent contractors, only to discover that they are considered employees  under the law and that you are liable for additional unemployment taxes and interest. To define your relationship with the individuals you engaged, you must assess the degree of direction and control you have over their services.

The Employee Relationship

The courts have ruled that no single factor or group of factors conclusively define an employer-employee relationship, and that you are an employer if you control what will be done and how it will be done.  Indicators of control over an individual’s activities may include: 

  • requiring full-time services
  • requiring attendance at meetings and/or training sessions
  • requiring oral or written reports
  • requiring prior permission for absences
  • stipulating the hours of work
  • setting the rate of pay
  • reserving the right to terminate the individual’s services
  • employee working is integral to the conduct of your business’s operation

If you engage in any of these practices, you are exercising the rights of an employer and consequently may be considered liable under the U.I. law.  The courts have also ruled that an employment relationship may exist if you provide the individual with the means of performing services for you. Examples may include providing facilities, equipment, tools, and/or supplies. Also, control over important aspects of services performed other than results and means can create an employment relationship.

For example, an employment relationship can be created when a temporary employment referral agency has direction and control of client contact, the individual’s wages, and billing and collection from clients.  The manner of compensation for the individual’s services is also a factor. Employment relationships may provide compensation in the form of a salary, an hourly rate of pay or drawing account against future commissions with no requirement for repayment of unearned commissions. Other forms of compensation indicative of employment making reimbursement or allowance for business or travel expenses, and fringe benefits.

The nature of the services performed is also used to determine an employer-employee relationship. Unskilled or casual labor is usually regarded as employment because it typically is subject to supervision. However, even professionals, such as doctors and lawyers, can be considered employees under certain circumstances. Even when you give the individuals considerable freedom of action, you are their employer as long as you have the legal right to control the method or results of the services.

The Independent Contractor Relationship

An independent contractor relationship is often indicated when the individual you engage to perform services is in an established business offering those services to the public.

Indicators of independent contractor status may include:

  • advertising in electronic and/or print media
  • listing in the commercial pages of telephone directories
  • using business cards, business stationery, and billheads
  • carrying independent insurance
  • maintaining an establishment, or making significant
  • investment in facilities
  • assuming risk for profit or loss in providing services
  • freedom to provide services concurrently for other businesses, competitive or noncompetitive

If an employer-employee relationship exists, it does not matter what it is called by the person engaging the services. For example, if you issue individuals a 1099 form rather than a  W-2 form, they may still be employees. Even if you have individuals sign a statement claiming independent contractor status and waiving any rights as employees, those individuals may still be considered employees under the law.

Remember that the real distinction between the employer-employee relationship and the independent contractor relationship depends primarily on the level of direction and exercised by the person engaging the services. It is not defined by what the relationship called by the participants. In addition, there are certain types of services which are excluded or covered by statute regardless of the common law tests of direction and control.

The distinction between independent contractors and employees can be vital for you and your business. Protect yourself by obtaining a determination in advance from our Liability and Determination Section. You can also direct questions regarding independent contractors to the Liability and Determination Section by  (518) 457-2635.

RULE FOR INDEPENDENT CONTRACTORS

New York does not have a statutory definition of “independent contractor.”

New York follows the Common Law rule.

Indicia of control to determine if worker is an employee are set forth above by Regulations stated above. 

 

NORTH CAROLINA

LAW

N.C.G.S.A. § 97-2

(2) “Employee—The term “employee” means every person engaged in an employment under any appointment or contract of hire or apprenticeship, express or implied, oral or written, including aliens, and also minors, whether lawfully or unlawfully employed…

N.C.G.S.A. § 96-8

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(6)  a.   "Employment" means service performed including service in interstate commerce, except employment as defined in the Railroad Retirement Act and the Railroad Unemployment Insurance Act, performed for wage or under any contract of hire, written or oral, express or implied, in which the relationship of the individual performing such service and the employing unit for which such service is rendered is, as to such service, the legal relationship of employer and employee.  Provided, however, the term "employee" includes an officer of a corporation, but such term does not include (i) any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an independent contractor or (ii) any individual (except an officer of a corporation) who is not an employee under such common-law rules.

RULE FOR INDEPENDENT CONTRACTORS

North Carolina does not have a statutory definition of “independent contractor.”

North Carolina follows the Common Law rule.

Applicable Cases:

  • McCown v. Hines(353 N.C. 683).
    • “Under the common law, an “independent contractor” exercises an independent employment and contracts to do certain work according to his own judgment and method, without being subject to his employer except as to the result of his work.”
  • “No particular factor for determining whether a worker is an independent contractor is controlling in itself, and not all factors are required; rather, each factor must be considered along with all other circumstances to determine whether a workers’ compensation claimant possesses the degree of independence necessary for classification as an independent contractor.”

 

NORTH DAKOTA

LAW

North Dakota Century Code 34-11.1-01.

 3. “Employee” means any person, whether employed, appointed, or under contract, providing services for the state, county, city, or other political subdivision, for which compensation is paid…

North Dakota Century Code 52-01-01.

17. "Employment" means:

a. Any service performed prior to January 1, 1972, which was employment as defined in this subsection prior to such date, and subject to the other provisions of this subsection, service performed after December 31, 1971, including service in interstate commerce, by:

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(3) Any individual who, under the provisions of subdivision e, has the status of an employee.

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e. Services performed by an individual for wages or under any contract of hire must be deemed to be employment subject to the North Dakota Unemployment Compensation Law unless it is shown that the individual is an independent contractor as determined by the "common law" test.

REGULATIONS

N.D. Admin. Code § 27-02-14-01

5. Any service performed for another for wages or under any contract of hire is deemed to be employment unless it is shown that the individual performing the service is an independent contractor as determined by the "common law" test.

a. Generally, an employment relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what must be done but how it must be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if the employer has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. However, the right to terminate a contract before completion to prevent and minimize damages for a potential breach or actual breach of contract does not, by itself, suggest an employment relationship. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work, to the individual who performs the services. The fact that the contract must be performed at a specific location, such as a building site, does not, by itself, constitute furnishing a place to work if the nature of the work to be done precludes a separate site or is the customary practice in the industry. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, the individual is an independent contractor. An individual performing services as an independent contractor is not as to such services an employee. Individuals such as physicians, lawyers, dentists, veterinarians, construction contractors, public stenographers, and auctioneers, engaged in the pursuit of an independent trade, business, or profession, in which they offer their services to the public, are independent contractors and not employees.

b. As an aid to determining whether an individual is an employee under the common law rules, twenty factors or elements have been identified as indicating whether sufficient control is present to establish an employer- employee relationship. These twenty factors have been developed based on an examination of cases and rulings considering whether an individual is an employee. The degree of importance of each factor varies depending on the occupation and the factual context in which the services are performed. These twenty factors are designed only as guides for determining whether an individual is an employee; special scrutiny is required in applying these twenty factors to assure that formalistic aspects of an arrangement designed to achieve a particular status do not obscure the substance of the arrangement; that is, whether the person or persons for whom the services are performed exercise sufficient control over the individual for the individual to be classified as an employee. These twenty factors are described below:

(1) Instructions. A person who is required to comply with other persons' instructions about when, where, and how the person is to work is ordinarily an employee. This control factor is present if the person or persons for whom the services are performed have the right to require compliance with instructions.

(2) Training. Training a person by requiring an experienced employee to work with the person, by corresponding with the person, by requiring the person to attend meetings, or by using other methods, indicates that the person or persons for whom the services are performed want the services performed in a particular method or manner.

(3) Integration. Integration of the person's services into the business operations generally shows that the person is subject to direction and control. When the success or continuation of a business depends to an appreciable degree upon the performance of certain services, the persons who perform those services must necessarily be subject to a certain amount of control by the owner of the business.

(4) Services rendered personally. If the services must be rendered personally, presumably the person or persons for whom the services are performed are interested in the methods used to accomplish the work as well as in the results.

(5) Hiring, supervising, and paying assistants. If the person or persons for whom the services are performed hire, supervise, and pay assistants, that factor generally shows control over the persons on the job. However, if one person hires, supervises, and pays the other assistants pursuant to a contract under which the person agrees to provide materials and labor and under which the person is responsible only for the attainment of a result, this factor indicates an independent contractor status.

(6) Continuing relationship. A continuing relationship between the person and the person or persons for whom the services are performed indicates that an employer-employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring although irregular intervals.

(7) Set hours of work. The establishment of set hours of work by the person or persons for whom the services are performed is a factor indicating control.

(8) Full time required. If the person must devote substantially full time to the business of the person or persons for whom the services are performed, such person or persons have control over the amount of time the person spends working and impliedly restrict the person from doing other gainful work. An independent contractor, on the other hand, is free to work when and for whom he or she chooses.

(9) Doing work on the premises of the person or persons for whom the services are performed. If the work is performed on the premises of the person or persons for whom the services are performed, that factor suggests control over the person, especially if the work could be done elsewhere. Work done off the premises of the person or persons receiving the services, such as at the office of the worker, indicates some freedom from control. However, this fact by itself does not mean that the person is not an employee. The importance of this factor depends on the nature of the service involved and the extent to which an employer generally would require that employees perform such services on the employer's premises. Control over the place of work is indicated when the person or persons for whom the services are performed have the right to compel the worker to travel a designated route, to canvass a territory within a certain time, or to work at specific places as required.

(10) Order or sequence set. If a person must perform services in the order or sequence set by the person or persons for whom the services are performed, that factor shows that the person is not free to follow the person's own pattern of work but must follow the established routines and schedules of the person or persons for whom the services are performed. Often, because of the nature of an occupation, the person or persons for whom the services are performed do not set the order of the services or set the order infrequently. It is sufficient to show control, however, if such person or persons retain the right to do so.

(11) Oral or written reports. A requirement that the person submit regular or written reports to the person or persons for whom the services are performed indicates a degree of control. By contract, however, parties can agree that services are to be performed by certain dates and the persons performing those services can be required to report as to the status of the services being performed so that the person for whom the services are being performed can coordinate other contracts that person may have which are required in the successful total completion of a particular project. 

(12) Payment by hour, week, month. Payment by the hour, week, or month generally points to an employer-employee relationship, provided that this method of payment is not just a convenient way of paying a lump sum agreed upon as the cost of a job. Payment made by the job or on a straight commission generally indicates that the worker is an independent contractor.

(13) Payment of business or traveling expenses, or both. If the person or persons for whom the services are performed ordinarily pay the person's business or traveling expenses, or both, the person is ordinarily an employee. An employer, to be able to control expenses, generally retains the right to regulate and direct the person's business activities.

(14) Furnishing of tools and materials. The fact that the person or persons for whom the services are performed furnish significant tools, materials, and other equipment tends to show the existence of an employer-employee relationship.

(15) Significant investment. If the person invests in facilities that are used by the person in performing services and are not typically maintained by employees (such as the maintenance of an office rented at fair value from an unrelated party), that factor tends to indicate that the person is an independent contractor. On the other hand, lack of investment in facilities indicates dependence on the person or persons for whom the services are performed for such facilities and, accordingly, the existence of an employer employee relationship.

(16) Realization of profit or loss. A person who can realize a profit or suffer a loss as a result of the person's services (in addition to the profit or loss ordinarily realized by employees) is generally an independent contractor, but the person who cannot is an employee. For example, if the person is subject to a real risk of economic loss due to significant investments or a bona fide liability for expenses, such as salary payments to unrelated employees, that factor indicates that the person is an independent contractor. The risk that a person will not receive payment for his or her services, however, is common to both independent contractors and employees and thus does not constitute a sufficient economic risk to support treatment as an independent contractor.

(17) Working for more than one firm at a time. If a person performs services under multiple contracts for unrelated persons or firms at the same time, that factor generally indicates that the person is an independent contractor. However, a person who performs services for more than one person may be an employee for each of the persons, especially where such persons are part of the same service arrangement.

(18) Making service available to general public. The fact that a person makes his or her services available to the general public on a regular and consistent basis indicates an independent contractor relationship.

(19) Right to discharge. The right to discharge a person is a factor indicating that the person is an employee and the person possessing the right is an employer. An employer exercises control through the threat of dismissal, which causes the person to obey the employer's instructions. An independent contractor, on the other hand, cannot be fired so long as the independent contractor produces a result that meets the contract specifications.

(20) Right to terminate. If the person has the right to end his or her relationship with the person for whom the services are performed at any time he or she wishes without incurring liability, that factor indicates an employer-employee relationship. A contract can be terminated by the mutual agreement of the parties before its completion or by one of the parties to the contract before its completion to prevent a further breach of the contract or to minimize damages. This situation indicates an independent contractor relationship.

RULE FOR INDEPENDENT CONTRACTORS

North Dakota does not have a statutory definition of “independent contractor.”

North Dakota follows the Common Law rule.

Indicia of control to determine if worker is an employee are set forth above by Regulations stated above. 

Applicable Cases:

  • Mutual Life Ins. Co. of New York v. State (71 N.D. 78).  “The test in determining whether an employer and employee relationship exists is who has right of control of details of work, and if person for whom work is being done has right of control, whether he exercises it or not, and is concerned not only with result but also with manner and method of its doing, he is an “employer” and person doing work his “employee,” and if he is concerned merely with result of work and has no control over details of its doing, the person doing the work is an “independent contractor.”

 

OHIO

LAW

Ohio Rev. Code §4123.01

(A)(1) “Employee” means:

(a) Every person in the service of the state, or any county, municipal corporation, township, or school district therein, including regular members of lawfully constituted police and fire departments of municipal corporations and townships, whether paid or volunteer, and whenever serving within the state or on temporary assignment outside thereof, and executive officers of boards of education, under any appointment of contract of hire, express or implied, oral or written, including any elected official of the state, or of any county, municipal corporation, or township, or members of boards of education.

Ohio Rev. Code §4141.01(B)

(B)(1) "Employment" means service performed by an individual for remuneration under any contract of hire, written or oral, express or implied, including service performed in interstate commerce and service performed by an officer of a corporation, without regard to whether such service is executive, managerial, or manual in nature, and without regard to whether such officer is a stockholder or a member of the board of directors of the corporation, unless it is shown to the satisfaction of the director that such individual has been and will continue to be free from direction or control over the performance of such service, both under a contract of service and in fact. The director shall adopt rules to define "direction or control."

REGULATIONS

Admin. Code §4141-3-05

(A) Except as specifically provided in sections 4141.01(B)(2)(K) and 41411.39 of the Revised Code, a worker is in employment when an “employer-employee” relationship exists between the worker and the person for whom the individual performs services and the director determines that:

(1) The person for whom services are performed has the right to direct or control the performance of such services; and

(2) Remuneration is received by the worker for services performed.

(B) As an aid to determining whether there is sufficient direction or control present, the common law rules identify twenty factors or elements. When present, each of these factors serves to indicate some degree of direction or control. The degree of importance of each factor varies depending on the occupation and the factual context in which the services are performed.  The twenty factors set forth below are designed only as guides for determining whether sufficient direction or control exists and must be considered in totality:

(1) The worker is required to comply with the instructions of the person for whom services are being performed, regarding when, where, and how the worker is to perform the services;

(2) The person for whom services are being performed requires particular training for the worker performing services;

(3) The services provided are part of the regular business of the person for whom services are being performed;

(4) The person for whom services are being performed requires that services be provided by a particular worker;

(5) The person for whom services are being performed are being performed hires, supervises or pays the wages of the worker performing services;

(6) A continuing relationship exists between the person for whom services are being performed and the worker performing services which contemplates continuing or recurring work, even if not full time;

(7) The person for whom services are being performed requires set hours during which services are to be performed;

(8) The person for whom services are being performed requires the worker to devote himself or herself full time to the business of the person for whom services are being performed;

(9) The person for whom services are being performed requires that work be performed on its premises;

(10) The person for whom services are being performed requires that the worker follow the order of work set by the person for whom services are being performed;

(11) The person for whom services are being performed requires the worker to make oral or written progress reports;

(12) The person for whom services are being performed pays the worker on a regular basis such as hourly, weekly, or monthly;

(13) The person for whom services are being performed pays expenses for the worker performing services;

(14) The person for whom services are being performed furnishes tools. Instrumentalities, and other materials for use by the worker in performing services;

(15) There is a lack of investment by the worker in the facilities used to perform services;

(16) There is lack of profit or loss to the worker performing services as a result of the performance of such services;

(17) The worker performing services is not performing services for a number of persons at the same time;

(18) The worker performing services does not make such services available to the general public;

(19) The person for whom services are being performed has a right to discharge the worker performing services;

(20) The worker performing services has the right to end the relationship with the person for whom services are being performed without incurring liability pursuant to an employment contract or agreement.

The director shall make a determination, based on the factors listed in this rule as to whether or not an employment relationship exists purposes of Chapter 4141 of the Revised Code.

RULE FOR INDEPENDENT CONTRACTORS

Ohio does not have a statutory definition of “independent contractor.”

Ohio follows the Common Law rule.

Indicia of control to determine if worker is an employee are set forth above by Regulations stated above. 

 

OKLAHOMA

LAW

Okl.St.Ann §165.1

1. “Employer” means every individual, partnership, firm, association, corporation, the legal representative of a deceased individual, or the receiver, trustee or successor of an individual, firm, partnership, association or corporation, employing any person in this state;

2. “Employee” means any person permitted to work by an employer

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Okl.St.Ann §40-1-210

“Employment” means:

(1) Any service, including service in interstate commerce, performed by:

… (b) any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an employee

RULE FOR INDEPENDENT CONTRACTORS

Oklahoma does not have a statutory definition of “independent contractor.”

Oklahoma follows the Common Law rule

Applicable Cases:

  • Clark v. First Baptist Church (570 P.2d 327).  “Evidentiary factors warranting finding of a master-servant relationship include commencement and duration of the agreement, right to hire and discharge and agreement as to payment; however, decisive test for determining workmen’s compensation coverage is whether the employer retained a right of control and superintendence of the work.”
  • Duncan v. Powers Imports (884 P.2d 854).  “Factors to be considered in deciding whether workers’ compensation claimant is independent contractor or employee are: (1) nature of contract between parties; (2) degree of control which employer may exercise on details of work; (3) whether the one employed is engaged in distinct occupation or business; (4) kind of occupation; (5) skill required in the particular occupation; (6) whether employer supplies instrumentalities, tools and place of work; (7) length of time for which person is employed; (8) method of payment; (9) whether work is part of regular business of employer; (10) whether parties believe they are creating relationship of master servant; and (11) right of either to terminate relationship without liability.”

 

OREGON

LAW

ORS § 652.310

(2) “Employee” means any individual who otherwise than as copartner of the employer or as an independent contractor renders personal services wholly or partly in this state to an employer who pays or agrees to pay such individual at a fixed rate, based on the time spend in the performance of such services or on the number of operations accomplished, or quantity produced or handled.

ORS § 657.030

(1) As used in this chapter, unless the context requires otherwise, and subject to ORS 657.035, 657.040 and 657.045 to 657.094, or any other section which excludes services from the term "employment," "employment" means service for an employer, including service in interstate commerce, within or outside of the United States, performed for remuneration or under any contract of hire, written or oral, express or implied.

ORS § 657.040

(1)  Services performed by an individual for remuneration are deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the Director of the Employment Department that the individual is an independent contractor, as that term is defined in ORS 670.600.

RULE FOR INDEPENDENT CONTRACTORS

Oregon DOES have a statutory definition of “independent contractor.”

ORS § 670.600

(2)  As used in ORS chapters 316, 656, 657, 671 and 701, "independent contractor" means a person who provides services for remuneration and who, in the provision of the services:

(a)  Is free from direction and control over the means and manner of providing the services, subject only to the right of the person for whom the services are provided to specify the desired results;

(b)  Except as provided in subsection (4) of this section, is customarily engaged in an independently established business;

(c)  Is licensed under ORS chapter 671 or 701 if the person provides services for which a license is required under ORS chapter 671 or 701; and

(d)  Is responsible for obtaining other licenses or certificates necessary to provide the services.

(3)  For purposes of subsection (2)(b) of this section, a person is considered to be customarily engaged in an independently established business if any three of the following requirements are met:

(a)  The person maintains a business location:

(A)  That is separate from the business or work location of the person for whom the services are provided; or

(B)  That is in a portion of the person's residence and that portion is used primarily for the business.

(b)  The person bears the risk of loss related to the business or the provision of services as shown by factors such as:

(A)  The person enters into fixed-price contracts;

(B)  The person is required to correct defective work;

(C)  The person warrants the services provided; or

(D)  The person negotiates indemnification agreements or purchases liability insurance, performance bonds or errors and omissions insurance.

(c)  The person provides contracted services for two or more different persons within a 12-month period, or the person routinely engages in business advertising, solicitation or other marketing efforts reasonably calculated to obtain new contracts to provide similar services.

(d)  The person makes a significant investment in the business, through means such as:

(A)  Purchasing tools or equipment necessary to provide the services;

(B)  Paying for the premises or facilities where the services are provided; or

(C)  Paying for licenses, certificates or specialized training required to provide the services.

(e)  The person has the authority to hire other persons to provide or to assist in providing the services and has the authority to fire those persons.

(4)  Subsection (2)(b) of this section does not apply if the person files a Schedule F as part of an income tax return and the person provides farm labor or farm services that are reportable on Schedule C of an income tax return.

(5)  For purposes of determining whether an individual provides services as an independent contractor:

(a)  The creation or use of a business entity, such as a corporation or a limited liability company, by an individual for the purpose of providing services does not, by itself, establish that the individual provides services as an independent contractor.(b)  When the individual provides services through a business entity, such as a corporation or a limited liability company, the provisions in subsection (2), (3) or (4) of this section may be satisfied by the individual or the business entity.

Oregon follows the A and C rule. (With some variation)

ORS § 670.600 (See above for further criteria for est. Independent Contractor status)

(2)  As used in ORS chapters 316, 656, 657, 671 and 701, "independent contractor" means a person who provides services for remuneration and who, in the provision of the services:

(a)  Is free from direction and control over the means and manner of providing the services, subject only to the right of the person for whom the services are provided to specify the desired results;

(b)  Except as provided in subsection (4) of this section, is customarily engaged in an independently established business;

(c)  Is licensed under ORS chapter 671 or 701 if the person provides services for which a license is required under ORS chapter 671 or 701; and

(d)  Is responsible for obtaining other licenses or certificates necessary to provide the services.

PENNSYLVANIA

LAW

43 P.S. §753

*   *   *   *   *

(j)(1) “Employer” means the Commonwealth of Pennsylvania, its political subdivision, and their instrumentalities and every individual, co-partnership, association, corporation (domestic or foreign) or other entity, the legal representative, trustee in bankruptcy, receiver or trustee of any individual, copartnership, association or corporation or other entity, or the legal representative of a deceased person, who or which employed or employs any employee in employment subject to his act for some portion of the day during a calendar year, or who or which has elected to become fully subject to this act, and whose election remains in force.

RULE FOR INDEPENDENT CONTRACTORS

Pennsylvania does NOT have a statutory definition of “independent contractor.”

Pennsylvania follows the A and C rule.

43 P.S. §753

(l) (1) “Employment’ means all personal service performed for remuneration by an individual under any contract of hire, express or implied, written or oral, including service in interstate commerce, and service as an officer of a corporation. 

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(2)(b)

Services performed by an individual for wages shall be deemed to be employment subject to this act, unless and until it is shown to the satisfaction of the department that—

(a) such individual has been and will continue to be free from control or direction over the performance of such services both under his contract of service and in fact; and

(b) as to such services such individual is customarily engaged in an independently established trade, occupation, profession or business.

 

RHODE ISLAND

LAW

Rhode Island Gen. Laws § 28-42-3 

(17) "Employment", subject to §§ 28-42-4 – 28-42-10, means service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied;

Rhode Island Gen. Laws § 28-29-2

(4)  "Employee" means any person who has entered into the employment of or works under contract of service or apprenticeship with any employer

RULE FOR INDEPENDENT CONTRACTORS

Rhode Island DOES have a statutory definition of “independent contractor.”

Rhode Island Gen. Laws § 28-29-2 (11)

“Independent contractor” means a person who has filed a notice of designation as independent contractor with the director pursuant to § 28-29-17.2 or as otherwise found by the workers’ compensation court.

Rhode Island follows the common law rule.

Rhode Island Gen. Laws § 28-42-7

The determination of independent contractor or employee status for purposes of chapters 42 – 44 of this title shall be the same as those factors used by the Internal Revenue Service in its code and regulations.

Applicable Cases:

  • Deus ex rel. Deus v. S.S. Peter and Paul Church (820 A.2d 974).  The determinative factor in the existence of an employer-employee relationship for purposes of worker’s compensation exclusivity provision, is the employer’s right to exercise control and superintendence over his employees.”

 

SOUTH CAROLINA

LAW

South Carolina Code § 42-1-130.

“The term employee means every person engaged in an employment under any appointment, contract of hire, or apprenticeship, expressed or implied, oral or written, including aliens and also including minors, whether lawfully or unlawfully employed, but excludes a person whose employment is both casual and not in the course of the trade, business, profession, or occupation of his employer…”

South Carolina Code § 41-27-230.

"Employment" means:

(1) Any service performed prior to January 1, 1978, which was employment as defined in this subsection  prior to such date and, subject to the other provisions of this subsection, service performed after December 31, 1977, for wages under a contract of hire, written or oral, expressed or implied, including service in interstate commerce by:

*   *   *   *   *

(b) Any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee;

RULE FOR INDEPENDENT CONTRACTORS

South Carolina does not have a statutory definition of “independent contractor.”

South Carolina follows the common law rule.

Applicable Cases:

  • Bailey v. Owen Elec. Steel Co. of South Carolina, Inc. (298 S.C. 36).  “…The basic test is whether or not the work being done is a part of the general trade, business or occupation of the owner… In determining whether a claimant is a statutory employee, the relevant focuses are (1) whether the activity is an important part of the trade or business, (2) whether the activity is a necessary, essential and integral part of the business, and (3) whether the identical activity in question has been performed by employees of the principal employer.”

 

SOUTH DAKOTA

LAW

South Dakota Codified Laws § 61-1-10.

Employment generally subject to coverage -- Corporate officers and interstate commerce included.  "Employment" means any service performed prior to January 1, 1972, which was employment as defined in this section prior to such date and, subject to the provisions of §§  61-1-10.2 to 61-1-10.9, inclusive, service performed after December 31, 1971, including service in interstate commerce, by:

*   *   *   *   *
(2) Any individual who, under the usual common-law rules applicable in determining the employer-employee relationship has the status of an employee.
RULE FOR INDEPENDENT CONTRACTORS

South Dakota does not have a statutory definition of “independent contractor.”

South Dakota follows the A and C rule.

South Dakota Codified Laws 61-1-11.

Service performed by an individual for wages is employment subject to this title unless and until it is shown to the satisfaction of the Department of Labor that:

(1) The individual has been and will continue to be free from control or direction over the performance of the service, both under his contract of service and in fact; and

(2) The individual is customarily engaged in an independently established trade, occupation, profession, or business.

Applicable Cases:

  • David v. Frizzell (504 N.W.2d 330).  “Two primary factors are used to determine whether one is employee or independent contractor: whether individual has been and will continue to be free from control or direction over performance of services, both under contract of service and in fact; and whether individual is customarily engage in independent established trade, occupation, profession or business.” 

TENNESSEE

LAW

Tenn. Code Ann. §50-6-102

(10)(A) “Employee” includes every person, including a minor, whether lawfully or unlawfully employed…under any contract of hire or apprenticeship, written or implied…

Tenn. Code Ann. §50-7-207

(a) Definition of “Employment.” For purposes of this chapter and subject to the special rules contained in subsection (e), and the definitions contained in subsection (f), “employment” means service that meets all of the following conditions:

(1)  It is within any category of "included service" as listed in subsection (b);

(2)  It is not within any category of "excluded service" as listed in subsection (c); and

(3)  It is within any category of "Tennessee service" as listed in subsection (d).

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(B) Any individual who, under the usual common-law rules applicable in determining the employer/employee relationship, has the status of an employee;

RULE FOR INDEPENDENT CONTRACTORS

Tennessee does not have a statutory definition of “independent contractor.”

Tennessee follows the ABC rule.

Tenn. Code Ann. §50-7-207

(e) Special Rules. The following rules shall govern for purposes of this section:

(1) Service performed by an individual shall be deemed to be included service for purposes of this section irrespective of whether the common law relationship of master and servant exists, unless and until it is shown to the satisfaction of the administrator that:

(A) Such individual has been and will continue to be free from control and direction in connection with the performance of such service, both under any contract for the performance of service and in fact;

(B) Such service is performed either outside the usual course of the business for which the service is performed or is performed outside of all the places of business of the enterprise for which the service is performed; and

(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

Tenn. Code Ann. §50-6-102

(10)(D)  In a work relationship, in order to determine whether an individual is an “employee,” or whether an individual is a “subcontractor” or an “independent contractor,” the following factors shall be considered:

i.            The right to control the conduct of the work;

ii.            The right of termination;

iii.            The method of payment;

iv.            The freedom to select and hire helpers;

v.            The furnishing of tools and equipment;

vi.            Self-scheduling of working hours; and

vii.            The freedom to offer services to other entities

 

TEXAS

LAW

Texas Labor Code § 201.041

In this subtitle, "employment" means a service, including service in interstate commerce, performed by an individual for wages or under an express or implied contract of hire, unless it is shown to the satisfaction of the commission that the individual's performance of the service has been and will continue to be free from control or direction under the contract and in fact.

Texas Labor Code § 406.122

(a)  For purposes of workers' compensation insurance coverage, a person who performs work or provides a service for a general contractor or motor carrier who is an employer under this subtitle is an employee of that general contractor or motor carrier, unless the person is:

(1)  operating as an independent contractor; or

(2)  hired to perform the work or provide the service as an employee of a person operating as an independent contractor.

(b)  A subcontractor and the subcontractor's employees are not employees of the general contractor for purposes of this subtitle if the subcontractor:

(1)  is operating as an independent contractor; and

(2)  has entered into a written agreement with the general contractor that evidences a relationship in which the subcontractor assumes the responsibilities of an employer for the performance of work.

(c)  An owner operator and the owner operator's employees are not employees of a motor carrier for the purposes of this subtitle if the owner operator has entered into a written agreement with the motor carrier that evidences a relationship in which the owner operator assumes the responsibilities of an employer for the performance of work.

RULE FOR INDEPENDENT CONTRACTORS

Texas does not have a statutory definition of “independent contractor.”

Texas follows the common law rule.

Applicable Cases:

  • Industrial Indem. Exchange v. Southard (138 Tex. 531).  “The tests as to whether one is an independent contractor are the independent nature of his business, his obligation to furnish necessary tools, supplies, and material to perform the job, his right to control progress of work, except as to final results, the time for which he is employed, and method of payment, whether by time or by job.”

 

UTAH

LAW

Utah Laws 1953 § 35A-A-104

(1)… “employee,” “worker,” and “operative” mean:

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(b) a person in the service of any employer, as defined in Section 34A-2-103, who employs one or more workers or operatives regularly in the same business, or in or about the same establishment

            (i) under any contract or hire:

        (A) express or implied; and

        (B) oral or written;

            (ii) including aliens, minor, whether legally or illegally working for hire; and

            (iii) not including any person whose employment

        (A) is casual; and

(B) not in the usual course of the trade, business, or occupation of the employee’s employers.

Utah Laws § 35A-4-204

(1) Subject to the other provisions of this section, "employment" means any service performed for wages or under any contract of hire, whether written or oral, express or implied, including service in interstate commerce, and service as an officer of a corporation.

REGULATIONS

R994-204-301.

In order for a personal service to be excluded under Section 35A-4-204(3) of the Act, the service must be performed by an individual who is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as the services performed, and the individual providing the services must be free from the control and direction of the employer with respect to that service. Those individuals who wish to be classified as independent contractors must clearly establish their status as 109independent contractors by taking affirmative steps that indicate an informed business decision has been made.

R994-204-302.  Procedure.

(1) Section 35A-4-204(3) of the Act requires the employer to establish the excluded nature of the services "to the satisfaction of the Division".

(2) If the issue of an individual's status arises out of a claim for benefits, and there has been no prior status determination or declaratory order, a determination will be made on the basis of the best information available.

(3) If the issue of the status of an individual or class of workers arises out of an audit or request for declaratory order and there is no claim for benefits, the Department shall determine the status on the basis of the information presented by the employer, the individual, or such other information as the Department may gather through audit or investigation. An individual who is found to be an independent contractor by reason of an audit or declaratory order is not permitted to waive any right to unemployment benefits by filing a written consent to the determination pursuant to Section 63-46b-21(3)(b) while the service relationship with the employer continues. Such written consent is in violation of Section 35A-4-103(1)(c)(ii) of the Employment Security Act.

(4)  If the issue of an individual's status arises out of a claim for benefits and there has been a prior audit determination or declaratory order determining that the individual or class of workers to which the individual belongs to be independent contractors, the Department will issue a monetary determination excluding the claimant's earnings as an independent contractor. The claimant has ten (10) days to protest the determination.

R994-204-303.  Factors for Determining Independent Contractor Status.

(1) Services will be excluded under Section 35A-4-312 if the service arrangement meets the requirements of that section of the Act and this rule. Special scrutiny of the facts is required to assure that the form of a service arrangement does not obscure the substance of the arrangement; that is, whether the individual is independently established in a like trade, occupation, profession or business and is free from control and direction. The factors listed in subsections 303(2)b) and 303(3)(b) of this section are exclusive, but are intended only as aids in the analysis of the facts of each case. The degree of importance of each factor varies depending on the occupation and the factual context in which the service is performed. Some factors do not apply to certain occupations and, therefore, should not be given any weight.

(2) Independently Established.

(a) An individual will be considered customarily engaged in an independently established trade, occupation, profession, or business if the individual is, at the time the service is performed, regularly engaged in a trade, occupation, profession, or business of the same nature as the service performed, and the trade, occupation, profession, or business is established independently of the alleged employer. In other words, an independently established trade, occupation, profession, or business is created and exists apart from a relationship with a particular employer and does not depend on a relationship with any one employer for its continued existence.

(b) The following factors, if applicable, will be used as aids in determining whether an individual is customarily engaged in an independently established trade or business:

(i) Separate Place of Business. The individual has his own place of business separate from that of the employer.

(ii) Tools and Equipment. The individual has a substantial investment in the tools, equipment, or facilities customarily required to perform the services. "Tools of the trade" such as those used by carpenters, mechanics, and other trades or crafts, do not necessarily demonstrate independence.

(iii) Other Clients. The individual regularly performs services of the same nature for other customers or clients and is not required to work full time for the employer.

(iv) Profit or Loss. The individual is in a position to realize a profit or loss through his independently established business activity.

(v)  Advertising. The individual advertises his services in telephone directories, newspapers, magazines, or by other methods clearly demonstrating that he holds himself out to the public to perform the services.

(vi) Licenses. The individual has obtained any required and customary business and trade or professional licenses.

(vii) Business Tax Forms. The individual files self-employment and other business tax forms required by the Internal Revenue Service and other tax agencies.

(c) If an employer proves to the satisfaction of the department that the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as the service in question, there will be a rebuttable presumption that the employer did not have the right of or exercise direction or control over the service.

(3) Control and Direction.

(a) When an employer retains the right to control and direct the performance of a service, or actually exercises control and direction over the individual who performs the service, not only as to the result to be accomplished by the work but also as to the manner and means by which that result is to be accomplished, the individual is an employee of the employer for the purposes of the Act.

(b) The following factors, if applicable, will be used as aids in determining whether an employer has the right of or exercises control and direction over the service of an individual:

(i) Instructions. An individual who is required to comply with other persons' instructions about how the service is to be performed is ordinarily an employee. This factor is present if the employer for whom the service is performed has the right to require compliance with the instructions.

(ii) Training. Training an individual by requiring an experienced person to work with the individual, by corresponding with the individual, by requiring the individual to attend meetings, or by using other methods, indicates that the employer for whom the service is performed expects the service to be performed in a particular method or manner.

(iii) Pace or Sequence. A requirement that the service must be provided at a pace or ordered sequence of duties imposed by the employer indicates control or direction, but the coordinating and scheduling of the services of more than one service provider does not.

(iv) Work on Employer's Premises. A requirement that the service be performed on the employer's premises generally indicates that the employer for whom the service is performed has retained a right to supervise and oversee the manner in which the service is performed, especially if the service could be performed elsewhere.

(v) Personal Service. A requirement that the service must be performed personally and may not be assigned to others generally indicates the right to control or direct the manner in which the work is performed.

(vi) Continuous Relationship. A continuous service relationship between the individual and the employer indicates that an employer-employee relationship exists. A continuous relationship may exist where work is performed regularly or at frequently recurring although irregular intervals. A continuous relationship generally does not exist where the individual is contracted to complete specifically identified projects, even though the service relationship may extend over a significant period of time.

(vii) Set Hours of Work. The establishment of set hours of work by the employer, or a requirement that the individual must work full-time, indicates control.

(viii) Method of Payment. Payment by the hour, week, or month generally points to an employer-employee relationship, provided that this method of payment is not just a convenient way of paying progress billings as part of a fixed price agreed upon as the cost of a job.

R994-204-401. Safe Haven--General Definition.

The Administrative Procedures Act, Section 63-46B-21, permits any person to request that the Department issue a declaratory order determining the applicability of the Employment Security Act, a Commission rule, or order, to specific circumstances. Specifically, an employer may request a declaratory order determining the status of workers; that is, are they employees or independent contractors. Declaratory orders and audit findings determine only whether the employer is liable to pay contributions on wages paid to the workers in question. The "safe haven" provision provides a means by which the employer may rely on official determination of the Department pertaining to the applicability of Section 35A-4-204(3) of the Act. The provision allows the employer to obtain an official determination for contributions purposes, while preserving the worker's right to challenge that determination at a more appropriate time, when the work relationship has ended and a claim for benefits has been filed.

R994-204-402. Procedure.
(1) If the issue of the status of an individual or class of workers arises out of an audit or request for declaratory order and there is no claim for benefits pending at the time, the Department shall determine the status on the basis of the information presented by the employer, the individual, or such other information as the Department may gather through audit or investigation.

(2) An individual whose status is determined as a result of an audit or declaratory order shall not be permitted to file a written consent to the determination pursuant to Section 63-46B-21(3)(b) while the service relationship with the employer continues, and the Department will consider such a consent to be in violation of Section 35A-4-103(1)(c)(ii) of the Employment Security Act.

(3) (i) If the issue of an individual's status arises out of a claim for benefits and there has been a prior audit determination or declaratory order determining the status of the individual or a class of workers to which the individual belonged, the Department will issue a notice as part of the monetary determination, denying use of the individual's independent contractor earnings as wage credits for the base period, on the basis of the prior status determination. The individual may file a written protest of the determination within 10 days after the local office has notified him of the determination. Any protest will be referred to Central Office Claims for review.

(ii) Upon receipt of a protest filed under Section 402(3)(i), the Department will review the status of the individual. On the basis of its review, the Department may affirm the original determination or issue a new determination if there has been a change of facts in the work relationship. Either the individual or the employer may appeal the Department's decision.

R994-204-403. Employer Reliance on Official Determination.

When an employer receives a declaratory order or other official determination concluding that a worker or class of workers appears to be customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the contract of hire, and is free from the control and direction of the employer, the employer shall have no liability to pay unemployment contributions on compensation paid to the worker, except as provided in Section 404 of this rule.

R994-204-404. Effect of New Determination on Employer.

If a new determination by the Department, an Administrative Law Judge, or the Workforce Appeals Board holds that the status of an individual or class of workers to which the individual belonged is that of employee for purposes of the Employment Security Act, the employer shall be liable to pay unemployment contributions on all wages paid to workers in the class to which the individual belonged, from the beginning of the calendar quarter in which the new determination is made. In addition, the employer shall also be liable to pay contributions on any wages used by a claimant for purposes of establishing any claim for benefits affected by the new determination.  

RULE FOR INDEPENDENT CONTRACTORS

Utah DOES have a statutory definition of “independent contractor.”

UCA 1953 § 34A-2-103

(b)(i) “Independent contractor” means any person engaged in the performance of any work for another who, while so engaged is:

(A) independent of the employer in all that pertains to the execution of the work;

(B) not subject to the routine or control of the employer;

(C) engaged only in the performance of a definite job or piece of work; and

(D) subordinate to the employer only in effecting a result in accordance with the employer’s design.

Utah follows the A and C rule.

Utah Laws § 35A-4-204

*****

(3) Services performed by an individual for wages or under any contract of hire, written or oral, express or implied, are considered to be employment subject to this chapter, unless it is shown to the satisfaction of the division that:

(a) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of hire for services; and

(b) the individual has been and will continue to be free from control or direction over the means of performance of those services, both under the individual's contract of hire and in fact.

 (4) If an employer, consistent with a prior declaratory ruling or other formal determination by the division, has treated an individual as independently established and it is later determined that the individual is in fact an employee, the department may by rule provide for waiver of the employer's retroactive liability for contributions with respect to wages paid to the individual prior to the date of the division's later determination, except to the extent the individual has filed a claim for benefits.

Applicable Cases:

  • Gourdin By and Through Close v. Sharon’s Cultural Edc. Recreational Ass’n (845 P.2d 242). “Factors such as compensation, direction and control, intent, and business context, borrowed from case law distinguishing between employees and independent contractors, shape inquiry into employment relationship under Worker’s Compensation Act; however, all factors need not be present to support finding of employee status and no single factor is completely controlling.”

 

VERMONT

LAW

21 VSA § 1301

(6)(A) "Employment," subject to the other provisions of this subdivision (6), means service within the jurisdiction of this state, performed prior to January 1, 1978, which was employment as defined in this subdivision prior to such date and, subject to the other provisions of this subdivision, service performed after December 31, 1977, by an employee, as defined in subsections (i) and (o) of section 3306 of the Federal Unemployment Tax Act, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, expressed or implied.

RULE FOR INDEPENDENT CONTRACTORS

Vermont does not have a statutory definition of “independent contractor.”

Vermont follows the ABC rule.

Vermont Statutes § 1301

(B) Services performed by an individual for wages shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the commissioner that:

(i) Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and

(ii) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(iii) Such individual is customarily engaged in an independently established trade, occupation, profession or business.

Applicable Cases:

  • Price v. Department of Employment and Training, (150 Vt. 78). “Under “ABC test” for determining whether a person is an employee for purposes of unemployment taxes, services performed by person for wages are deemed to be employment under unemployment compensation law unless and until employer shows that person is either outside usual course of business for which service is performed or outside of places of business for employing enterprise, and person who provides service is customarily engaged in independently established trade, occupation, profession or business.”

 

VIRGINIA

LAW

Virginia Code § 60.2-101

“Employee” means:

1.a. Every person, including aliens and minor, in the service of another under any contract of hire or apprenticeship, written or implied, whether lawfully or unlawfully employed, except (i) one whose employment is not in the usual course of the trade, business, occupation or profession of the employer or (ii) as otherwise provided in subdivision 2 of this definition.

Virginia Code § 60.2-212

A. "Employment" means:

1. Any service including service in interstate commerce, performed for remuneration or under any contract of hire, written or oral, express or implied

RULE FOR INDEPENDENT CONTRACTORS

Virginia does not have a statutory definition of “independent contractor.”

Virginia follows the common law rule.

Virginia Code § 60.2-212

C.  Services performed by an individual for remuneration shall be deemed to be employment subject to this title unless the Commission determines that such individual is not an employee for purposes of the Federal Insurance Contributions Act and the Federal Unemployment Tax Act, based upon an application of the 20 factors set forth in Internal Revenue Service Revenue Ruling 87-41, issued pursuant to 26 C.F.R. 31.3306(i)-1 and 26 C.F.R. 31.3121(d)-1.

26 C.F.R. 31.3306(i)-1

(b)  Generally such relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work, to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is an independent contractor. An individual performing services as an independent contractor is not as to such services an employee. Individuals such as physicians, lawyers, dentists, veterinarians, construction contractors, public stenographers, and auctioneers, engaged in the pursuit of an independent trade, business, or profession, in which they offer their services to the public, are independent contractors and not employees.

 

WASHINGTON

LAW

R.C.W. §50.04.100

"Employment", subject only to the other provisions of this title, means personal service, of whatever nature, unlimited by the relationship of master and servant as known to the common law or any other legal relationship, including service in interstate commerce, performed for wages or under any contract calling for the performance of personal services, written or oral, express or implied.

Except as provided by RCW 50.04.145, personal services performed for an employing unit by one or more contractors or subcontractors acting individually or as a partnership, which do not meet the provisions of RCW 50.04.140, shall be considered employment of the employing unit: PROVIDED, HOWEVER, That such contractor or subcontractor shall be an employer under the provisions of this title in respect to personal services performed by individuals for such contractor or subcontractor.

RULE FOR INDEPENDENT CONTRACTORS

Washington does not have a statutory definition of “independent contractor.”

Washington follows the ABC rule.

RCWA 50.04.140

Services performed by an individual for remuneration shall be deemed to be employment subject to this title unless and until it is shown to the satisfaction of the commissioner that:

(1) (a)  Such individual has been and will continue to be free from control or direction over the performance of such service, both under his or her contract of service and in fact; and

(b)  Such service is either outside the usual course of business for which such service is performed, or that such service is performed outside of all the places of business of the enterprises for which such service is performed; and

(c)  Such individual is customarily engaged in an independently established trade, occupation, profession, or business, of the same nature as that involved in the contract of service.

 

WEST VIRGINIA

LAW

W. Va. Code §21A-1A-16

"Employment", subject to the other provisions of this article, means:  (1) Service, including service in interstate commerce, performed for wages or under any contract of hire, written or oral, express or implied;

 (2) Any service performed by an employee, as defined in Section 3306(i) of the federal Unemployment Tax Act [common law rule], including service in interstate commerce;

RULE FOR INDEPENDENT CONTRACTORS

West Virginia does not have a statutory definition of “independent contractor.”

West Virginia follows the ABC rule.

W. Va. Code §21A-1A-16

(7) Services performed by an individual for wages are employment subject to this chapter unless and until it is shown to the satisfaction of the commissioner that:

(A) The individual has been and will continue to be free from control or direction over the performance of the services, both under his or her contract of service and in fact; and

(B) the service is either outside the usual course of the business for which the service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(C) the individual is customarily engaged in an independently established trade, occupation, profession or business;

 

WISCONSIN

LAW

Wisconsin Statutes § 102.07

“Employee”… means”

(1)(a) Every person, including all officials, in the service of the state, or of any municipality therein whether elected or under any appointment, or contract of hire, express or implied, and whether a resident or employed or injured within or without the state…”

Wisconsin Statutes § 108.02

*****

(15) Employment.

(a) "Employment", subject to the other provisions of this subsection means any service, including service in interstate commerce, performed by an individual for pay.

RULE FOR INDEPENDENT CONTRACTORS

Wisconsin does not have a statutory definition of “independent contractor.”

Wisconsin follows the common law rule.

Wisconsin Statutes § 108.02

12) Employee.

 (a) "Employee" means any individual who is or has been performing services for an employing unit, in an employment, whether or not the individual is paid directly by such employing unit; except as provided in par. (b), (bm), (c) or (d).

 (b) During the period beginning on January 1, 1996, and ending on December 31, 1999, and during the period beginning on January 1, 2004, with respect to contribution requirements, and during the period beginning on January 1, 1996, and ending on April 1, 2000, and during the period beginning on April 4, 2004, with respect to benefit eligibility, par. (a) does not apply to an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker, if the employing unit satisfies the department that:

1. The individual:

a. Holds or has applied for an employer identification number with the federal internal revenue service; or

b. Has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year; and

2. The individual meets 6 or more of the following conditions:

a. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.

b. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and method of performing the services.

c. The individual incurs the main expenses related to the services that he or she performs under contract.

d. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.

e. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis.

f. The individual may realize a profit or suffer a loss under contracts to perform services.

g. The individual has recurring business liabilities or obligations.

h. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.

(bm) During the 4-year period beginning on January 1, 2000, with respect to contribution requirements, and during the period beginning on April 2, 2000, and ending on April 3, 2004, with respect to benefit eligibility, par. (a) does not apply to an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker, if the employing unit satisfies the department that the individual meets 7 or more of the following conditions by contract and in fact:

1. The individual holds or has applied for an identification number with the federal internal revenue service.

2. The individual has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year or, in the case of a new business, in the year in which such services were first performed.

3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.

4. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and methods of performing such services.

5. The individual incurs the main expenses related to the services that he or she performs under contract.

6. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.

7. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis.

8. The individual may realize a profit or suffer a loss under contracts to perform such services.

9. The individual has recurring business liabilities or obligations.

10. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.

Applicable Cases:

  • Thurn v. La Crosses Liquor Co. (46 N.W.2d 213). “Principal test to be applied in determining whether one rendering services for another is employee or independent contractor is whether employer has right to control details of work, since most significant indicium of independent contractor is his right to control details of work, although there are other things to be considered, such as work, time of employment, method of payment, and right of summary discharge of employees.”

 

WYOMING

LAW

Wyoming Statutes § 27-14-102.

(vii) “Employee” means any person engaged in any extrahazardous employment under any appointment, contract of hire or apprenticeship, express or implied, oral or written, and includes legally employed minors, aliens…

“Employee” does not include: … (D) Any individual engaged as an independent contractor.

*****

Wyoming Statutes § 27-3-104. 

(a)  As used in this act, "employment" means service:

(i)  Performed by an employee defined under 26 U.S.C. § 3306(i) including service in interstate commerce, except 26 U.S.C. § 3121(d)(2) does not apply;

(ii)  Subject to any federal tax against which credit may be taken for contribution payments into any state unemployment fund;

(iii)  Required to be employment under this act as a condition for full tax credit against the tax imposed by 26 U.S.C. §§ 3301 through 3311; and

(iv)  Otherwise specified under W.S. 27-3-104 through 27-3-108.

(b)  An individual who performs service for wages is an employee for purposes of this act unless it is shown that the individual:

(i)  Is free from control or direction over the details of the performance of services by contract and by fact;
(ii)  Repealed by Laws 1991, ch. 153, § 1.
(iii)  and (iv)  Repealed by Laws 1995, ch. 121, § 3.

(v)  Represents his services to the public as a self-employed individual or an independent contractor; and

(vi)  May substitute another individual to perform his services.

RULE FOR INDEPENDENT CONTRACTORS

Wyoming DOES have a statutory definition of “independent contractor.”

W.S.1977 § 27-14-102

(xxiii) “Independent Contractor” means an individual who performs services for another individual or entity and:

  1. Is free from control or direction over the details of the performance of services by contract and by fact;
  2. Repealed
  3. Represents his services to the public as a self-employed individual or an independent contractor; and
  4. May substitute another person to perform his services.

 Wyoming follows the common law rule.

Applicable Cases:

  • Stratman v. Admiral 760 P.2d 974.  “Primary test to determine existence of employment relationship is right of control of alleged employer, and factors useful in makes such a determination include method of payment, right to fire, furnishing of equipment, scope of work and control of premises where work is to be done.”

 

 State-by-State Table Listing of Independent Contractor Tests

State

Rule

Alabama

Common Law

Alaska

ABC

Arkansas

ABC

Arizona

Common Law

California

Common Law

Colorado

A and C

Connecticut

ABC

Delaware

ABC

District of Columbia

Common Law

Florida

Common Law

Georgia

A and C

Hawaii

ABC

Idaho

A and C

Illinois

ABC

Indiana

ABC

Iowa

Common Law

Kansas

Common Law

Kentucky

Common Law

Louisiana

ABC

Maine

A, and B or C

Maryland

ABC

Massachusetts

ABC

Michigan

Common Law

Minnesota

Common Law

Mississippi

Common Law

Missouri

Common Law

Montana

Common Law

Nebraska

ABC

Nevada

Common Law

New Hampshire

ABC

New Jersey

ABC

New Mexico

ABC

New York

Common Law

North Carolina

Common Law

North Dakota

Common Law

Ohio

Common Law

Oklahoma

Common Law

Oregon

A and C

Pennsylvania

A and C

Rhode Island

Common Law

South Carolina

Common Law

South Dakota

A and C

Tennessee

ABC

Texas

Common Law

Utah

A and C

Vermont

ABC

Virginia

Common Law

Washington

ABC

West Virginia

ABC

Wisconsin

Common Law

Wyoming

Common Law

This information should not be construed as or substituted for legal advice. It is provided for informational purposes only. It is advisable to consult with private counsel on the precise scope and interpretation of any laws/regulation/legislation and their impact on your particular business.

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