Employer v. Independent Contractors Flashcards
Who is an “employee”?
*The common law definition originated from the Restatement (Second) of Agency – 1958:
* Independent Contractor: one “who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking.
* Employee (servant): an agent whose principal controls or has the right to control the manner and means of the agent’s performance of work.
* Employer (master): a principal who employers an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.
FOCUS IS ON THE AMOUNT OF CONTROL THE MASTER HAS OVER THE SERVANT. IC IS ONE WHO CONTRACTS TO DO WORK BUT IS NOT SUBJECT TO CONTROL. FOCUS IS ON CONTROL.
Common Law Test
: “control over the manner and means” = primary test for determining whether someone is an employee.
* Characteristics of common law definition:
(1) Extent of control the touchstone
(2) A fact-intensive, multi-factored balancing test (derived from section 220 of restatement
(3) Party intent is a factor, but NOT dispositive
(4) Employment status is a legal conclusion. (even if worker and firm contract for certain status, under CL a court may determine that is not the real status). Rather than based on intent of parties alone. Even if worker and firm contract for a certain status, under the CL definition a court or agency may determine that is not the real status.
Common law test continues to dominate the law, along with economic realities test and the Reid factor test
New Restatement Test
New Restatement: employment relationship exists whenever a work acts, at least in part, to New Restatement: employment relationship exists whenever a work acts, at least in part, to
serve the interests of the employer; the employer consents to receive the svcs of the worker;
and the worker isn’t rendering svcs as an ind biz–which means the worker doesn’t exercise
entrepreneurial control over the manner/means of work. [not yet adopted by any jurisdiction]
* Entrepreneurial control: control over important biz decisions, including whether to
purchase & deploy equipment and whether/when to svc other customers.
* Under this approach, a worker is an employee UNLESS they exert entrepreneurial
control.
Cases for section
Fedex: drivers were IC. Entrepreneurial control is keystone in this case. even willing to accept entrepreneurial potential as sufficient.
Dynamex (only for CA wage/hours laws): Drivers were converted to IC, but court determined they were employees. used ABC Test * ABC test Burden on hiring entity to establish ALL three factors (conjunctive test):
o (A) that the worker is free from the control and direction of the hiring identity in connection with the performance of the work, both under the contract for the performance of the work and in fact
o (B) that the worker performs work that is outside the usual course of the hiring entity’s business
o (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
* Usually B is difficult for an entity to establish.
* ABC test is most likely to lead to determination that a worker is an employee.
Natkin v. Winfrey: Reid Test to determine IC or employee. Reid test significant touchstone is control. (2) Workers used their own equipment;
(3) Workers didn’t receive any employment benefits;
(4) Workers didn’t receive regular paychecks salaries;
(5) Oprah listed workers as nonemployees for tax purposes; (she can’t have her cake
& eat it too
