Recent legislation has been introduced to create a uniform definition of "employee." If passed, it would replace the current independent contractor analysis with a statutory, seven-point test to determine whether a worker is an employee. Under the proposal, independent contractor status can be established only by meeting all of the following factors:
1. The individual has been and continues to be free from control and direction in connection with the performance of the service.
2. The individual customarily is engaged in an independently established trade, occupation, profession, or business of the same nature as the trade, occupation, profession, or business involved in the service performed.
3. The individual is a separate and distinct business entity from the entity for which the service is being performed or, if the individual is providing construction services and is a sole proprietorship or partnership, the individual is a legitimate sole proprietorship or a partner in a legitimate partnership.
4. The individual incurs the primary expenses and has continuing or recurring business liabilities related to the service performed.
5. The individual is liable for breach of contract for failure to complete the service in the time and manner prescribed.
6. An agreement, written or oral, express or implied, exists describing the service to be performed, the payment the individual will receive for performance of the service, and the time frame for completion of the service.
7. The service performed by the individual is outside of the usual course of business of the employer.
This test will certainly change the independent contractor landscape. Even if the new law does not pass, it is clear that the Attorney General is ready to challenge the status.
Is is time to review your independent contractor agreement?
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