The Difference is More Important Now than Ever
By Frank Harty and Deb Hulett
The Ernster case reminds us of the importance of sorting out the nature of a relationship in advance and making the proper characterization. There are necessary and relatively easy steps to determining the status.
- Tradition. Whether the position is one that would traditionally be considered an independent contractor. There are some jobs that have been treated as independent contractors: tradespersons, sales brokers; the professions.
- Exclusivity. If a service provider works for more than one hiring party, it is much easier to establish the service provider is an independent contractor.
- Location. If the hiring party supplies equipment, tools, and the workplace, it is difficult to establish independent contractor status.
- Documents. While not nearly as important as many think, documents have their role. It is important to adopt a well-written document spelling out independent contractor status. Retaining counsel is advisable.
- Tax Treatment. Regardless of what the parties call themselves, it is important to treat the relationship properly for tax purposes.
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