When an employee embezzles money, a company may look for insurance coverage under a crime policy, for employee theft. When an independent contractor steals money, a general commercial liability may cover the loss. But when an independent contractor acts like an employee, performs services typical of an employee, then steals money — neither coverage may apply.
That’s the harsh lesson recently learned by an Indiana company. Telamon Corporation retained an independent contractor to provide services through a series of consulting agreements. Eventually, the company made her a Vice President (please don’t name your independent contractors “Vice Presidents,” then claim they are not employees!) and put her in charge of recovering old telecommunications equipment to sell it to salvagers. She had other ideas, however. She recovered the equipment and sold it to salvagers, but she kept the money for herself. $5.2 million of it.
That eventually landed her in prison, where she won free use of an orange jumpsuit for five years. I know, she could have afforded a blinged-out $5 million jumpsuit, but she took the free one from the state.
Telamon, meanwhile, tapped its insurers to try to recover the cash.
Are you on the hit list?
The California Supreme Court may be about to rewrite the test for Who Is My Employee? under California wage and hour law. 
You didn’t disappear, though, did you? (Or, did you?!!) This is a fun little game but bad risk management strategy.
Many of these claims have succeeded, but here’s an unusual way to lose class action status. This judge refused to certify the proposed class because of lack of experience of counsel. Thanks to my colleague, Greg Mersol (experienced counsel), 
Who Is My Employee? 