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Is that worker a company employee or independent contractor?

On Behalf of | Nov 29, 2018 | Business Litigation |

Ambiguity can attach to much subject matter in the business world. A company owner in Connecticut or elsewhere does not want to deal with it in the context of worker classification.

For purposes of American federal labor law, notes an online primer on a key subset of that topic, a worker “is either an employee or an independent contractor.”

The distinction is far from being purely academic. A misclassified worker can miss out on important company benefits or conversely be straitjacketed by an employer who unduly impinges on his or her customary creativity and independence. And a company owner deemed by federal authorities to have improperly classified a worker can be subjected to hefty fines and even a civil lawsuit.

Tax authorities and federal labor officials look especially closely at cases where they suspect an employer is unlawfully deeming a worker an independent contractor rather than a regular employee.

The reason: Companies categorizing their workers as contractors can frequently avoid paying them overtime or granting them vacation leave. Independent contractors are also not entitled to – as are standard employees – sick days, unemployment compensation, workers’ comp and other benefits. And because businesses do not have to withhold income tax for independent contractors, neither must they pay into worker-protective programs like Social Security and Medicare.

On the flip side, not all independent contractors chafe under that label and want to be lawfully regarded as employees. Many of them highly value their independence and work autonomy, sometimes regarding employers’ control over them as being excessive.

The line for properly classifying worker status can be blurry. The above overview of the subject duly stresses that, “There is no single rule or test for determining whether individuals are employees or independent contractors.”

What does customarily guide courts in classification determinations are multiple factors that center around notions of employer control versus an independent contractor’s on-the-job freedoms.

Experienced commercial attorneys from an established business law firm can help businesses and workers sort through those factors and properly assess how work status should be classified. Having certainty on that point can be fundamentally important.