Determining whether an individual providing services to a company is an independent contractor or an employee depends on many factors, some unusual and not typical for employment law questions. What state are you in? What laws and governmental agencies are you concerned about? And perhaps most frustratingly, is the current president of the United States a democrat or a republican?
All of these questions are relevant to the crazy patchwork quilt of the law in the United States governing whether a worker is an independent contractor rather than an employee. As we have discussed previously (here, here, and here), you can have two workers — one in Texas and one in California — doing exactly the same work under the same circumstances, and come to very different answers on the independent contractor question, depending on the state authority making the determination. Even different entities of the federal government — say, the IRS and the EEOC — will not necessarily tell you the same thing.
But why does the political affiliation of the president of the United States matter so much? Doesn’t the law remain fairly consistent from one administration to the next? While that may be true with statutes and court cases, the National Labor Relations Board’s (“NLRB”) decisions often shift dramatically when the political affiliation of the president changes. After many years of following a common law test on independent contractors, the NLRB under Obama “refined” the test, adopting an economics reality approach. That approach essentially required companies to show that their workers actually worked for other companies performing the same type of task before they could be considered independent contractors. It was no longer enough to show that the worker was actually free to work for others, but rather the company needed to show that the worker had actually done such work for another company. Now that we have a new Board where the majority of the members have been appointed by our current president, we are back to the common law test that looks more to the level of control the company has over the worker.
The issue of whether workers are independent contractors always involves risks and employers should evaluate those risks carefully. That analysis needs to include not only consideration of the company’s business model but also geography (i.e., the states where the company does business), applicable laws to employees (e.g., overtime laws), and which governmental agencies might be especially interested in their business (e.g., OSHA?). And, yes, who might happen to be sitting in the White House.