Summary of Independent Contractor Laws
Independent contractors are not subject to laws covering employees. Because those laws, which govern things like overtime, workers’ compensation, Prepaid Health, temporary disability insurance, and unemployment insurance, are inapplicable to contractors, employers sometimes think that this classification is a panacea for employment challenges. However, classification of an individual as an employee or independent contractor is complex and nuanced, and there are serious consequences if it is not done properly.
One of the reasons independent contractor classification is such a complex issue is because courts and government agencies apply different laws with varying requirements to assess worker status. Because there is no uniform test for determining independent contractor status, there may be situations where an individual is correctly classified as an independent contractor under one law while being considered an employee under another law.
To better understand and ensure compliance in this area, HEC encourages members to devote time this month to auditing their independent contractor classifications. HEC’s newly-revised Summary of Independent Contractor Laws will assist in this process by providing more information on the independent contractor tests utilized by courts and agencies in assessing independent contractor status under a sampling of employment laws.