In most states, including Delaware, New Jersey and Pennsylvania, the classification of an employee vs. an independent contractor generally comes down to the issue of control. This means, not only do we need to know who has control over the individual’s duties and responsibilities, but just as important, does the individual have independence to determine on their own the manner and method to perform those duties.
It is important to remember that companies may not avoid liability for workers’ compensation benefits simply by classifying its employees as independent contractors. There are more considerations than just how an employer classifies an individual, and even having an Independent Contract Agreement likely will not be enough.
Here are several factors that that the judge or adjudicating body may consider in determining whether a workers’ compensation claimant is an employee or an independent contractor:
- Is there an Independent Contractor Agreement and what does it say?
- Who pays the claimant and in what manner?
- Does the claimant have their own business for the work they are performing and do they carry their own Workers’ Compensation insurance?
- What percentage of the claimant’s total income derives from their work with the alleged employer?
- Who provides the tools, equipment, supplies and devices needed to perform the job?
- Does the claimant have the freedom to perform the duties and tasks of the job without supervision and how much control does the company have?
Moving forward, you might consider revising or incorporating specific language in all IC agreements, and also be mindful of what level of control your company maintains over individuals you consider to be independent contractors. Specifically, does the person your company considers to be an independent contractor, have the freedom to do their job without your management and supervision, and can they determine the manner in which they complete their tasks?