Independent Contractor vs. Employee – News & Why Do We Care

What Is an Independent Contractor?
An independent contractor is someone who runs his or her own business. There has been a trend where more companies are tying to save money by calling people who work for them independent contractors. The benefits to the employer is that they do not have to pay employer taxes, social security, worker’s compensation insurance, vacation, paid time off, sick pay, health benefits, or retirement. The more potential employees covered, the greater the savings to the employer. Companies avoid the employment relationship in several ways. For instance, the can hire employees through temporary employers or simply sign independent contractor agreements directly with the employer.

Recent Cases Highlight this Issue
In Portland, Oregon, a local barber shop called the Modern Man classified its barbers as independent contractors. When the barbers were not being paid they got on the news because they picketed the barber shop. Oregon Live Article. In response to this action, Brad Avakian, the Commissioner of the Oregon Bureau of Labor & Industries, posted the following:

Barbers at Modern Man can contact our agency with claims — we’ll investigate and determine whether they should be classified as employees, not independent contractors.

Posted by Brad Avakian on Wednesday, June 3, 2015

The purpose of determining whether the barbers were independent contractors was to provide better protection to the workers under Oregon’s Wage & Hour laws. This is because Oregon’s wage and hour laws provide employees with the right to sue for their unpaid wages, overtime wages, minimum wages, deducted wages, etc. They also allow the employee to recover their attorney fees. So there are a host of very powerful laws to protect the worker once they are classified as employees. In addition, severe penalties can be levied against the employer and for the employee where the employer fails to pay all wages as required by Oregon law.

In federal court, the Ninth Circuit found that FedEx misclassified its delivery drivers as independent contractors in both Oregon and California. The point is that these types of misclassifications are everywhere. It is not just the small time shops, like Modern Man that make the mistake. Instead, large sophisticated companies like FedEx, and every size company in-between, make this mistake. Sometimes client fear larger companies, thinking that they have powerful attorneys on their side, but obviously large companies can perform unlawful actions as easily as the small ones.

How to determine if you are an Independent Contractor or employee
To determine whether a person is properly classified as an employee or as an independent contractor is complex. Both state and federal wage and hour law use a version of the “economic realities” test to determine whether a person could be classified as an independent contractor. Technical Assistance. The economic realities test essentially looks to determine whether and to what degree the worker is economically dependent upon the putative employer. The best way to determine if you are misclassified as an independent contractor is to call Schuck Law at (360) 566-9243 because the test gets significantly more complex as you attempt to apply facts to it. Independent Contractor page.

Google By David Schuck

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