Asian Journal- The Filipino-American Community Newspaper

LAST week, we discussed why it makes a difference for a worker if he or she is classified as an independent contractor (i.e., a 1099 worker) or an employee. While advantageous for the employer, it is generally unfavorable to the employee. Independent contractors are not employees and do not have the same rights and protections that employees enjoy. For instance, independent contractors do not have the rights to minimum wage or overtime payment that employees have. The former cannot claim overtime compensation or the premium (1.5 or 2 times) hourly rate and they lose significant compensation simply because of the classification.

Unlike employees independent contractors or 1099 workers cannot avail of the basic employment benefits such as unemployment or worker’s compensation protection. Consider the following problem: a worker who is laid off or terminated needs emergency money while looking for another job. In this situation, employees can obtain unemployment benefits to assist them while they are looking for another job. However, independent contractors are not entitled to the same unemployment benefits.

The law protects the employee by formulating rules that affirm the employee status of the working person. However, some employers still resort to the practice of misclassifying their workers as independent contractors to save money. How can a worker know that he or she has been correctly classified as an independent contractor? Courts consider the following factors:

1. The employer’s right to control the manner and means of performance. This is the most important factor. If the employer has the right to exercise complete control over how the worker should do the work, then the worker is an employee. Employers will direct the employee what tasks to accomplish and how to accomplish these tasks.

2. Whether the employment relationship may be terminated at will. The right to terminate the relationship at will, without cause, is strong evidence that an employer-employee relationship exists. Independent contractors are normally bound by either a written or oral agreement to finish specific tasks or work and will not be able to "quit" without liability.

3. Whether the worker engages in an occupation or business distinct from the employer’s. Independent contractors usually operate their own businesses and advertise themselves to the general public as ready to perform services similar to the one being performed for the principal. In other words, the principal is not the only source of the worker’s income or livelihood.

4. Whether the type of work done by the worker is usually done under the employer’s supervision. If the work being performed is subject to extensive supervision, then the work is likely being performed by an employee. Independent contractors normally "specialize" in something and a specialist usually works without supervision.

5. The skill required to perform the work. Workers who perform tasks which require little or no skill or experience are generally supervised. Supervision infers an employer-employee relationship.