Companies constantly want to categorize workers as independent contractors rather than employees. However, recent rulings concerning Uber and other decisions have made clear that this is a dangerous game. The problem is that the law focuses on subjective tests that leave employers without definitive answers. This was again the case in the recent case of Garcia v. Seacon Logix, Inc.
Garcia involved four truck drivers suing their employer for reimbursement of paycheck deductions claiming they were incorrectly classified as independent contractors. The court held that the workers were misclassified as independent contractors and qualified as employees despite the language contained in agreements between the workers and the company.
The court reiterated other recent decisions holding that the main test for the employment relationship is whether the worker has the right to control the manner and means of accomplishing the result desired. If so, the worker is correctly classified as an independent contractor. If not, then the worker should be classified as an employee. There are also a number of secondary factors, which include whether:
(1) the worker is engaged in a distinct occupation or business
(2) the work is usually done under the principal’s direction versus by a specialist without supervision
(3) the principal supplies tools and place of work
(4) a certain level of skill is required
(5) the services are performed in a certain length of time
(6) the payment is weekly or by the hour versus by the job
(7) the work is part of the principal’s regular business
(8) the parties believe they are creating an employer-employee relationship
Companies should reference this list of factors when deciding whether to categorizing a worker as an employee or independent contractors. Of course, the help of an attorney is always advisable.