Nyemaster Goode, P.C.

Employee or Independent Contractor? Part IV

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.

  1. 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.
  2. 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.
  3. Location.  If the hiring party supplies equipment, tools, and the workplace, it is difficult to establish independent contractor status.
  4. 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.
  5. Tax Treatment.  Regardless of what the parties call themselves, it is important to treat the relationship properly for tax purposes.

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