Everyone knows there employees have certain rights that independent contractors do not, but it can be difficult to define the difference between the two categories. In recent years, California and the federal government have tried to draw the lines between freelancers and employees, but their statutory definitions still fall short when they are applied to the diversity of real life.
Meanwhile, the U.S. Supreme Court has continued to rule that there is no one-size-fits-all test to decide the difference between the two job categories. Instead, it calls for a multi-part test to be applied in every case. The result is that these cases can be difficult and their outcomes unpredictable.
Some employers have taken advantage of this ambiguity by misclassifying workers as independent contractors when they should be treated as employees, with all the benefits and worker protections that status entitles them to.
When they address the question of whether a worker should be considered as an employee or independent contractor, the federal courts use an open-ended test that includes questions such as:
- Whether the worker’s services are integral to the employer’s business.
- Whether the parties treat the relationship as temporary or permanent.
- How much investment the worker has put into the equipment and facilities. (For instance, if the employer supplies all the tools and workspace necessary for the work, a court is more likely to find that the worker is an employee.)
- How much control the worker has over the work, including their working hours and the particulars of the work itself.
These are just some of the questions courts ask. Every case is highly specific.
With the high cost of healthcare and other types of benefits, many employers today realize they can save money by hiring independent contractors rather than full-time employees. But, if they are making these worker act like full-time employees, the law says they should extend the full benefits of employment to them.
Workers who have been misclassified may have the right to take legal action.