Court eases rules about independent contractor status 

Vermont map

 

From the Stowe Reporter, Erin Mansfield reports on a decision by the Vermont Supreme Court that said an LLC did not have to have employees to be an independent contractor. Erin writes:

A ruling by the Vermont Supreme Court has opened the door to more workers being considered independent contractors rather than employees.

The ruling, which came Friday, is the second time in seven months that the Vermont Supreme Court determined the state Department of Labor had misinterpreted labor law.

The decision says an owner of a limited liability company, or LLC, can be considered an independent contractor even when the person does not have any employees.

 The Vermont Department of Labor had argued that LLC owners must be considered individuals, and therefore could be considered employees, unless they had additional workers.

In the case decided Friday, Bourbeau Custom Homes Inc. appealed the Department of Labor’s decision that nine of Bourbeau’s workers, including one who contracted through an LLC, were employees whom the company had misclassified as independent contractors.

In the company’s first appeal, the number of allegedly misclassified workers was reduced to five.

In the decision issued Friday, which was the result of the third appeal, the Vermont Supreme Court agreed with the Labor Department that four of the workers were in fact employees. But the court said the worker with an LLC could not legally be considered an individual, because an LLC is by definition a company, and therefore could not be an employee.

“The department’s position that single-member LLCs must be treated as individuals unless they employ other employees, in which case they are considered to be employing units, is unsupported by the statute creating the limited liability company form,” the decision says.

“The LLC statute does not distinguish between single- and multi-member LLCs. Nor does it distinguish between those with employees and those without,” the decision says. “It states that ‘one or more persons may organize (an LLC) consisting of one or more members,’ but does not establish that single-member LLCs are to be treated differently.”

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