When control of an independent contractor makes the news

From HB.BLR.com — Keith A. Gorgos of Coughlin & Gerhart writes about two cases in New York where newspaper delivery persons were found to be employees because the company exercised too much control over their work.  Keith provides the background to both cases and reports that “control” was the critical factor; Keith also provides excellent advice on best practices.  He writes:

“‘Control’ is key test…

In both cases, the 3rd Department reasoned that when a potential employer exercises control over either the results produced or the means used to achieve the results, an employer-employee relationship may exist. Although neither of those factors is determinative alone, the 3rd Department found there were sufficient indications that the companies had enough control over the carriers’ work to impose employer liability. In re Lewis, 121 A.D.3d 1488 (3d Dep’t, 2014), and In re Armison, ___ A.D.3d ___, 2014 WL 6475324 (3d Dep’t, Nov. 20, 2014).

Best practices…

Be aware that the IRS and the New York State Department of Labor (NYSDOL) use multipart tests for determining the existence of an independent contractor relationship and freely share their findings with other “task force” enforcement agencies such as the Workers’ Compensation Board.

To make things more difficult, many administrative agencies use different independent contractor tests. Because these agencies derive revenue from the “misclassification” of independent contractors (i.e., fines and penalties), there is an incentive for zealous and aggressive enforcement.

Best practices include consulting with qualified counsel to draft an independent contractor agreement that unambiguously states the contractor has the freedom to perform the agreed-on service with minimal control by the entity engaging him.

Other best practices include not micromanaging contractors’ actual performance of the work. Given the expense and liability that results from a defective independent contractor relationship, it’s wise to tread carefully and avoid the impulse to unnecessarily control the work being performed by your contractors….”

Read the full story at When control of an independent contractor makes the news.

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