The Difference Matters More than Ever
By Frank Harty and Deb Hulett
The Internal Revenue Service recently announced a campaign to more closely scrutinize the status of taxpayers who claim to be independent contractors. It is not just the government that is taking a closer look at these characterizations. A number of lawsuits have been filed alleging that workers classified as contractors are really employees who should be paid minimum wage and overtime pay under state and federal law. Class action plaintiff's lawyers are looking for claims based on mischaracterization. The distinction between employee and independent contractor has become more important than ever.
There are other very important practical distinctions based upon status. Whether a business owns the creative works of someone working on its behalf may turn upon whether that individual is an employee or independent contractor. A plethora of state and federal wage and hour and anti-discrimination laws protect employees – but not independent contractors. Finally, there may be dire tax consequences for mischaracterizing a true employee as an independent contractor.
A recent victory by Deb Hulett and Frank Harty of Nyemaster Goode's labor and employment department points out the importance of knowing how to engage in a pragmatic, real world analysis to evaluate the distinction between an employee and an independent contractor. In this article, we discuss this distinction and how it played out in the federal courts of Iowa and the Eighth Circuit Court of Appeals.
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