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Employment Law -- Employee

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How Do Courts Decide Between an Independent Contractor and An Employee?

Companies trying to save money will sometimes hire people as independent contractors, but what happens when someone hired as an independent contractor injures someone else?

Generally, the person who employs an independent contractor is not liable for the damages caused by the contractor. Still, there are some exceptions to this rule. First, the court will have to determine if the person was an employee or truly is an independent contractor.

What’s the Difference Between an Employee and an Independent Contractor?

There are several differences between an employee and an independent contractor, such as:

  • Tax issues
  • Benefits
  • Direction by the employer

An independent contractor is hired by the employer to perform a specific job. However, they are not under the employer’s immediate control and may do the work however they decide. For most courts, the main point of contention will revolve around whether the employee is subject to the control of the employer.

General Matters vs. Supervision, Dominion, and Control

For some, this means that the employer must have control over physical details or more than just controlling “general matters.” For example, George claims that a newspaper carrier, Fred, assaulted him when the two had an argument about the delivery of George’s morning newspaper.

Now George will try:

  • Personally suing Fred for a personal injury claim
  • Suing the publisher of the newspaper (claiming that Fred was an employee)

The courts may rule that Fred was an independent contractor, not an employee. The newspaper company only:

  • Controlled the territorial boundaries of Fred’s route
  • Set the time papers had to be delivered
  • Handled complaints about the delivery

However, the company never met Fred or even knew that he had been hired by the delivery company that they contract with. The newspaper’s rules on how the deliveries were to be done wasn’t enough to meet legal claims for:

  • Supervision
  • Dominion
  • Control

Additionally, it does not necessarily matter what a company designates a person. Just because an employer and a person have a “contractual agreement,” and that agreement calls the person an independent contractor, the employee is not necessarily an independent contractor.

If the employer exercises supervision, dominion, and control over the person, they will be considered an employee, not an independent contractor.

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