Employee vs. Independent Contractor - It's A Matter Of Control
In previous articles, I discussed the difference between an employee and an independent contractor, and the IRS's position on this distinction. This article talks about the factors to be considered when deciding whether an individual is an employee or an independant contractor.
As a Delaware business lawyer, I’ve seen a lot of contracts entitled “Independent Contractor Agreement.” But the fact that a contract calls someone an independent contractor doesn’t make him one. It’s therefore important to have a Delaware business attorney prepare your written agreement in a way that accurately describes in detail your relationship with the worker. It’s also important for you to discuss with your attorney how the contract needs to be carried out by you so your conduct does not turn someone you consider an independent contractor into an employee.
An awful lot has been written about how the courts decide whether a worker is your employee or an independent contractor. In Delaware, although there are numerous factors taken into consideration, the most significant factor has to do with control by the business owner.
Let’s compare two different kinds of control. If a business owner controls how the work is performed, the courts view that as evidence of an employer-employee relationship. On the other hand, if the owner’s concern is the final result and not how that result will be achieved, then the court views that as evidence of an independent contractor relationship.
One of the most recent views expressed by a Delaware court boils it down to a “time, manner and method” rule. If the owner maintains control over the time, manner and method of performing the work, as opposed to just requiring that the results are in compliance with the terms of the contract, then an employer-employee relationship is found to exist.
If the individual in question is your employee instead of an independent contractor, it means:
(1) He can a claim for unemployment insurance
(2) He can file a claim for workers comp disability benefits
(3) He can file a claim under Delaware's Wage Payment and Collection Act
(4) Taxes have to be withheld
(5) As his employer, you will be vicariously liable for any injuries he causes to others while he's in the course and scope of his employment.
