From The Federalist Society, Tammy Dee McCutchen and Alexander MacDonald provide a thorough review of the problems and inconsistencies with independent contractor classification at both the state and federal lever and make a proposal for a single standard to be adoped. Tammy and Alexander write:
policymakers should look to objective criteria—such as a contract stating that the worker is an independent contractor and has the right to work for multiple businesses—and the common-law control test. Control is the factor that most distinguishes an employee from an independent contractor. An independent worker is just that, independent—in control of how her own work is performed. It is this flexibility that millions of independent workers value most. This change of focus could be accomplished by replacing every definition of “employee” and “employer” in every federal statute with the following:
The term “employee” means a person who provides services to an employer for compensation but does not include an independent contractor.
The term “employer” means a person who pays an employee for services but does not include a person who contracts with an independent contractor.
An “independent contractor” is a person who has entered into a written agreement to provide services as an independent contractor, is not prohibited from providing services to multiple businesses, and controls the manner of his or her work. The contract to provide services may allow control over the results of the work or require the parties to comply with state or federal laws or regulations.
These definitions would need to preempt state law definitions, or the chaos that has resulted from state independent contractor laws would continue. Such broad preemption might strike some readers as radical. But it would hardly be unprecedented—or indeed particularly controversial from a legal standpoint. Congress has the power to preempt state employment laws. Rightly or wrongly, the Supreme Court has interpreted Congress’s Article I Commerce Clause powers expansively. Congress can regulate any activity with a substantial effect on interstate commerce, as employment classification surely does. And if Congress has the power to regulate, it also has the power to preempt. The Supremacy Clause elevates federal law over any conflicting state law, policy, or rule. The constitutional question is therefore simple; the trick is getting the policy right.