Retaining control over how independent contractors do their work can sink an otherwise legitimate independent contractor relationship.
Fortunately, steps can almost always be taken to give up aspects of control that do not hurt the business case for using a contractor instead of an employee. Companies need to be thoughtful and proactive, though, in evaluating and modifying these relationships — before they are challenged in a misclassification claim.
Here are four aspects of control you may be able to relinquish in your relationships with independent contractors:
- When the contractor works — If you care only about meeting a deadline, do not require the contractor to work certain days or hours. Let the contractor work whenever the contractor wants to work.
- Where the contractor works — Do you really need the work to be performed onsite? If not, let the contractor work wherever the contractor wants to work.
- Whether the contractor can hire helpers — If you care only about the result and the contractor will stand by its work, do you care if the contractor does all the work personally? If not, allow the contractor to retain helpers, at the contractor’s discretion.
- Whether the contractor can work for competitors — If this restriction is not critical, do not impose it unnecessarily. The ability to work for competitors is a strong factor in favor of independent contractor status.
These are just four of many possible areas where control can be relinquished, tilting the balancing tests more in favor of independent contractor status. While these four steps certainly do not gurantee proper classification, they are a few of the many ways you can better protect the classification of a worker as a contractor, as opposed to an employee.
Right to Control Tests are the most common types of tests used for determining Who Is My Employee? If you can give up elements of control without impairing the business case for working with an independent contractor vs. an employee, give up that control.
You may be rewarded with a win if the contractor claims to be misclassified as an employee.
Take steps to evaluate these relationships before litigation and before a government audit. Once an independent contractor’s status has been challenged, it may be too late to avoid a finding of independent contractor misclassification.