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New Test Clarification for Independent Contractors
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January 30, 2019

Always a challenging and sometimes confusing regulation – are your employees truly employees, or are they really independent contractors – or vice versa? In my July, 2017 blog Are Independent Contractors Truly Independent I laid-out the rules and both the federal and Connecticut tests to confirm independent contractor or employee. But, a new National Labor Relations Board (NLRB) ruling – SuperShuttle DFW, Inc. identifies an updated 10 Factor test employers should now also be using. This case effectively overturned a previous Hartford, CT. NLRB case FedEx Home Delivery, 361 NLRB No. 55 (Sep. 30, 2014). That ruling said that the FedEx workers were employees and not independent contractors.

The Factors

  1. The extent of control by the employer
  2. Whether or not the individual is engaged in a distinct occupation or business
  3. Whether the work is usually done under the direction of the employer or by a specialist without supervision
  4. The skill required in the occupation
  5. Whether the employer or individual supplies instrumentalities, tools, and place of work
  6. The length of time for which individual is employed
  7. The method of payment
  8. Whether or not work is part of the regular business of the employer
  9. Whether or not the parties believe they are creating an independent contractor relationship
  10. Whether the principal is or is not in the business

These factors are based from a common law test from 1958 – as identified in the Bloomberg Law article:

The NLRB’s ruling uses a common-law test drawn from the 1958 version of the Restatement of Agency, a legal treatise that names 10 non-exhaustive factors to determine whether a worker is an independent contractor or employee. Those factors include the level of control a business exerts over a worker, the method of payment, and the amount of supervision involved in the job.

So, if you haven’t already asked yourself, as I asked myself – what set of factors do I use to determine if my workers are employees or independent contractors? You should!

As with several of regulations employers must follow, some, as in this case, can require more than one jurisdiction to make that determination. In Connecticut for example, employers should additionally review the CT DOL ABC test.

The major take-away for this decision is knowledge:

  • Be aware of this new decision, and the 10 Factor Test.
  • Include it as you review your workers.
  • Train and ensure your managers and others involved in hiring decisions for both employees and independent contractors are aware of this going forward.
Nick Daukas

Nick Daukas

Author

With 25+ years of HR experience Nick specializes in ER, OD, Recruitment and Legal Compliance. He has an MBA and holds advanced HR certifications SPHR, SHRM-SCP.

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