“Whenever he gets in a fix, he reaches into his bag of tricks!” Yes, boys and girls, I am talking about Felix the Cat, whose magical bag of tricks could be transformed to get him out of any treacherous situation. Don’t you wish you had one of those?
Well, I won’t share mine, but I can offer this tip, which may help you avoid a treacherous situation.
This weekend I was reading a California decision on independent contractor misclassification. (I do other, more fun things in my free time too, so don’t make fun. Ok, you should make fun a little.) While analyzing Right to Control factors, the court ruled that the worst fact for the business was that it could terminate the contractor at will. The ability to terminate a relationship at will, the court ruled, was the “ultimate” form of control! Really? I agree it’s a factor among many, but the “ultimate factor”? Come on.
Anyway, this problem is easily avoided with some creativity. Allow me to reach into my bag of tricks.
If your relationship with a contractor is for an indefinite time period and you rely on work orders to describe each project, consider a one-year term instead. No, not a one-year term with auto-renewals unless the parties give notice. That’s too close to an indefinite term. Allow the one year term to expire. But…
Add a provision that, after the one-year term expires, if you offer a new work order and if the contractor accepts a new work order, then acceptance of that new work order constitutes an agreement to renew the independent contractor agreement for another year.
This variation on the auto-renewal approach requires the parties to take an affirmative act to renew the agreement — the offer and acceptance of a new work order. And this approach also allows you to maintain that the relationship with the contractor is project-by-project (one work order at a time).
The main agreement does not have to be terminable at will. No need for that. If each project is defined by a work order and you’re not satisfied, then don’t offer any new work orders. The agreement itself does not have to be terminated.
If your independent contractor’s tasks are not defined by work orders, then this solution might not work for you. But if your contractor picks up work one work order at a time, this can be a helpful little maneuver.
No guarantees here, but I like this approach better than the indefinite agreement. Contracts of indefinite duration are definitely a negative factor in the Independent Contractor vs. Employee analysis, even though most courts would not be as fixated on that fact as this particular court was.
Now I am going to turn my bag of tricks into a helicopter.
© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.