NEWS & RESOURCES

Employee or Independent Contractor: 11-20

09.08.15

This is a continuation of a prior article. An issue that arises for some of our Columbus Ohio Bureau of Workers’ Compensation Clients is where there exists a construction contract, whether the worker is an employee of a general or sub-contractor and thus covered under that employers Ohio BWC policy. One way the BWC and Industrial Commission tries to determine the classification of the worker is through twenty criteria in R.C. § 4123.01(A)(1)(c). Here are criteria 11 through 20:

11.) Is the person required to make oral or written reports of progress to the other contracting party?

This is another factor that is likely only present in a limited number of employer/employee relationship. As such its absence is not a good indicator whether a worker is an employee or independent contractor.

                    EXAMPLE:  EMPLOYEE

Bob tells Joe that he is to mow a customer’s lawn, plant some treed along the driveway, and finish with laying mulch down on the flower beds. He tells Joes that once he has completed each task and before he starts the next one to call him and tell him how much dirt, gas, etc. he used. This indicates that Joe is an employee because Joe does not have very much independence from Bob while on the job.

                    EXAMPLE: INDEPENDENT CONTRACTOR

Bob tells Joe he is to mow a customer’s lawn, plant some trees along the driveway, and lay mulch in the flower beds. Bob only needs to know when the job is complete.

12.) Is the person paid for services on a regular basis such as hourly, weekly, or monthly??

Courts are more likely to see a consistent pay rate to indicate an employee/employer relationship. This is related to question number 3 as it is a way for the judge to determine how integrated a worker is in the regular functioning of a business.

                     EXAMPLE: EMPLOYEE

Bob tells Joe to mow a customer’s law, plant some trees, and lay down some mulch. Bob will pay Joe $10 per hour he works. This indicates that Joe is an employee because he pay is set at a consistent rate and is easily calculable based off of the amount of work he puts in.

                      EXAMPLE: INDEPENDENT CONTRACTOR

Bob tells Joe to mow a customer’s lawn, plant some trees, and lay down some mulch. Bob will pay Joe 10% of what he charges the customer for the job. This indicates that Joe is an independent contractor because his pay is not easily calculable on the amount of work he puts in.

13.) Are the person’s expenses paid for by the other contracting party?

Payments of materials used by the worker to complete the job is a factor that the courts look at. Use of a company credit/debit card to make these purchases shows that a worker is considered an employee, but where a worker buys his own materials to use to complete a job hints at them being an independent contractor.

                     EXAMPLE: EMPLOYEE

Bob hires Joe to mow a customer’s lawn, plant some trees, and lay down some mulch. Joe uses Bob’s company credit card to buy the gas for the mower, the trees, and the mulch. This indicates that Joe is an employee because he does not have to pay out of pocket for the expenses that the job requires.

                      EXAMPLE: INDEPENDENT CONTRACTOR

Bob hires Joe to mow a customer’s lawn, plant some trees, and lay down some mulch. Joe uses his own credit card to purchase the gas for the mower, the trees, and the mulch. This would indicate Joe being an independent contractor because he has to pay out of pocket for the expenses that the job requires.

14.) Are the person’s tools and materials furnished by the other contracting party?

This is used by the court to show who has control of the means of work, if a worker has to buy their own equipment it shows that they have more control over how a job is performed and the result of the job.

                     EXAMPLE: EMPLOYEE

Bob hires Joe to mow a customer’s lawn, plant some trees, and lay down some mulch. Joe uses Bob’s company mower, shovels and rakes. This would indicate Joe being an employee because he relies on the equipment that is provided by Bob in order to complete the job.

                       EXAMPLE: INDEPENDENT CONTRACTOR

Bob hires Joe to mow a customer’s lawn, plant some trees, and lay down some mulch. Joe uses his own mower along with his own shovels and racks. This indicates that Joe is an independent contractor because he is uses his own equipment that he bought himself.

EXAMPLE: DIFFICULT CASE

Bob hires Joe to mow a customer’s lawn, plant some tress, and lay down some mulch. Joe uses Bob’s company mower, but uses his own shovels and racks to plant the tress and lay down the mulch. This situation is a little uncertain because Joe uses his own tools, but also uses Bob’s company mower. A judge could take this situation as either indicating Joe as an employee or an independent contractor.

15.) Is the person provided with the facilities used to perform services?

This again sheds light on the control of the means or work and how a job is done. This speaks to who has day-to-day control over the worker. The more day-to-day control an employer has the more likely the worker will be seen as an employee.

                      EXAMPLE: EMPLOYEE

Bob hires Joe to make cabinets in his warehouse. The majority of Joe’s work takes place in Bob’s warehouse. From his warehouse Bob is able to supervise Joe and control the way he constructs the cabinets including the machines that are available and the methods Joe is to use. This would indicate Joe as an employee because he conducts his work in a facility that Bob has control over.

                      EXAMPLE: INDEPENDENT CONTRACTOR

Bob hires Joe to make cabinets. Joe has his own workshop where he constructs the cabinets. Joe has complete control of what methods and tools he wants to use to build the cabinets. This indicates that Joe is an independent contractor because he has control over his own facility.

16.) Does the person fail to realize a profit or suffer a loss as a result of the services provided?

 In a more simplified language this asks if regardless of the profit (or lack of) that the business makes, do you get paid the same. A worker being paid the same amount of money for the same amount of work no matter the result of a job is more likely to be seen as an employee rather than an independent contractor. This ties into the question that asks about the rate of pay for a worker.

                      EXAMPLE: EMPLOYEE

Bob tells Joe to mow a customer’s lawn, plant some trees, and lay down some mulch. Joe is paid $10 per hour he works. Bob underestimated the materials that were needed for the job and has to order more, this causes him to lose money on the job, but Joe is still paid his $10 per hour he worked. Since Joe’s pay is not effected by Bob’s loss of profit it indicated him as an employee.

                      EXAMPLE: INDEPENDENT CONTRACTOR

Bob tells Joe to mow a customer’s lawn, plant some trees, and lay down some mulch. Joe is paid 10% of the end profit. Bob underestimated the material needed to complete the job and has to order more, which causes him to lose money on the job, because Joe’s pay is reliant on the profit that Bob makes it indicates him as an independent contractor.

17.) Does the person only perform the service for this specific employer, rather than a number of employers at the same time?

If a worker has multiple jobs going on at the same time under different supervisors, he is more likely to be seen as an independent contractor.

                      EXAMPLE: EMPLOYEE

Bob’s Home Improvement hired Joe as their dry wall framer. Bob expects Joe to not do any dry wall framing for any other competing company while he is employed by Bob’s Home Improvement. This indicates Joe as an employee because he offers his services exclusively to Bob’s Home Improvement.

                      EXAMPLE: INDEPENDENT CONTRACTOR

Bob’s Home Improvement hired Joe as a dry wall framer. Contemporaneously, Joe is also working as a dry wall framer for two other companies. This indicates Joe as an independent contractor because he does not offer his services exclusively to Bob’s Home Improvement.

18.) Does the person choose not to make the same services available to the general public?

                      EXAMPLE: EMPLOYEE

Bob hires Joe as a dry wall framer. Joe does not offer his services to the general public because he works only for Joe. This would indicate Joe as an employee because he is relying on Bob to provide him with the jobs.

                      EXAMPLE: INDEPENDENT CONTRACTOR

Bob hires Joe to frame dry wall. Joe makes his services available to the general public. Steve from across the street needs drywall framed as well, he asks Joe if he’ll do his framing. Joe agrees to do the work

19.) Does the other contracting party have a right to discharge this person?

Again just as a lot of previous questions this is to indicate who has control over the work that is being done. An independent contractor cannot be fired without exposing the other contracting party to a breach of contract lawsuit.

                      EXAMPLE: EMPLOYEE

Bob hires Joe as a dry wall framer. After several months Bob fires Joe because of poor performance. Bob, an employer, has a right to fire Joe, an employee. Joe’s only recourse against Bob would be to file a wrongful firing suit. This would indicate that Joe is an employee because he is not able to sue Bob for breach of contract.

                      EXAMPLE: INDEPENDENT CONTRACTOR

Bob contracts Joe as a dry wall framer. After several weeks Bob fires Joe because of poor performance. Bob, a general contractor, cannot fire Joe, an independent contractor, but rather Joe can try to terminate the construction contract. Joe is able to bring a suit against Bob for breach of contract because Bob terminated the contract early. This would indicate Joe being an independent contractor because he able to bring a breach of contract action against Bob.

20.) Does the person have the right to end the relationship with other contracting party without incurring liability pursuant to an employment contract or agreement? ?

An employment contract would be looked at by the court as an indication of an employer/employee relationship.

                      EXAMPLE: EMPLOYEE

Bob is a general contractor in Ohio, an “at will” employment state. Bob hires Joe as a dry wall framer. After several months Joe quits because he is not happy working for Bob. Joe is not vulnerable to any legal liability for quitting on Bob, despite the fact that Joe quit leaving half the dry wall job incomplete. This indicates that Joe is an employee because it is his right to quit “at will.”

                      EXAMPLE: INDEPENDENT CONTRACTOR

Bob contracts Joe as a dry wall framer. After several weeks Joe quits because he is not happy working with Bob. It is Joe’s legal obligation to complete a contract or he is vulnerable for a breach of contract action against him. This would indicate Joe being an independent contractor because of his obligation to complete the contract.

 Author: Jake Stang

 

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