John Ho, in the New York Labor and Employment Law Report, writes that in difficult economic times, employers may resort more to the use of so-called independent contractors, to avoid all personnel/administrative costs affiliated with bringing statutory employees on board. I agree that this will continue to be a flashpoint in the coming year, but one that hearkens back to longstanding problems for putative employers.
He notes that different statutes have different tests. There are two things, however, that remain constant throughout all of these different statutory tests–control and proof of an independently established business. I know, in New Jersey, which uses the A-B-C test, the “C” element, i.e. independent business, is the one that most employers get into trouble on. The putative contractor must be shown to be in his own business, such as evidencing that the business is incorporated, having liability insurance, business cards, advertising and, most importantly, doing work for more than just one employer.
If there is not a spread of work done for a number of different employers, a Department of Labor and its sub-divisions, such as Unemployment, and Wage-Hour, will, in knee-jerk fashion, assert that the person or persons are employees. That leads not only to demand for payment of back-due premiums, but also, more dangerously, assessment of penalties, which could, under many state constructs, be escalated geometrically.
John’s piece can be viewed at http://www.nylaborandemploymentlawreport.com/articles/wage-and-hour/