subject: Identifying Independent Contractors from Employee Status [print this page] Identifying Independent Contractors from Employee Status
Smaller businesses would prefer to hire independent contractors than employees. The independent contractors are usually of lower costs for the company because they do not require benefits given to a normal employee. Independent contractors are not like the normal employees that are protected under the wage and hour laws of California.
Confusions with regards to identifying an independent contractor from an employee usually lead to violation of the California wage and hour laws. Thus, it is very necessary for an employer to learn how to identify which is which so that no violations will be committed and paying for penalties and imprisonment are prevented.
In California, there is a test that is applied to be able to identify if a worker is an independent contractor or not. This test is called as the "control test." The control test investigates who has the primary control over the work. If the worker is not responsible of the majority of the work, he or she is considered as an employee. Otherwise, he or she is considered as an independent contractor.
Borello test used the key elements of the control test to solve a case which was entitled as S.G. Borello & Sons v. Dept. of Industrial Relations. The following eight factors are the considerations made for the Borello test:
whether the one performing services is engaged in a distinct occupation or business;
the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
the skill required in the particular occupation;
whether the principal or worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
the length of time for which the services are to be performed;
the method of payment, whether by the time or by the job;
whether or not the work is a part of a regular business of the principal;
whether or not the parties believe they are creating the relationship of employer-employee.
The basic concerns of the Borello test are the wage and hour laws, state discrimination, and harassment. This test was governed by the California state courts. However, the federal court has its own set of laws and considerations. This imposes a test that is similar to the Borello test. The said test has six factors, which are:
the degree of the alleged employer's right to control the manner in which the work is to be performed;
the alleged employee's opportunity for profit or loss depending upon his or her managerial skills;
the alleged employee's investment in equipment or materials required for his or her task, or his or her employment of helpers;
whether the service rendered requires a special skill;
the degree of permanence of the working relationship;
whether the service rendered is an integral part of the alleged employer's business.
Both cases show that factors that are considered vary from cases. However, it is clear enough that the court weighs the work control in the tests to identify an employee and an ndependent contractor.
