Independent Contractor vs. Employee

August 8th, 2007

The classification of employee versus independent contractor is a crucial on.  It is crucial because it has implications on issues like benefits, overtime pay, unemployment insurance, employment discrimination and family and medical leave.  In recent months, FedEx has been battling its drivers over this issue in a series of administrative hearings and state court decisions.  So far, decisions have come down from the Internal Revenue Service, the National Labor Relations Board, various state unemployment insurance agencies, and 31 cases from 24 state courts, all finding in favor of the drivers, classifying them as employees and not independent contractors as FedEx has been doing internally for years.  The basic test for determing whether a worker is an independent contractor or employee is control.  A worker is an independent contractor when he is “free from control and direction in connection with the performance” of services, both contractually and in fact.  If the worker is not free from control and direction than he is an employee.

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