How “Independent” Are Your Independent Contractors?


Frequently, clients will say to me:  “If I just call my employees ‘independent contractors,’ I won’t have to (pay benefits, withhold taxes, comply with Obamacare, etc.)”  If legal compliance was that easy, I would be out of a job.  Judges don’t care what you call the people who work for you.  Instead, they will examine the totality of the relationship to determine if an individual is an “employee” or “independent contractor.”

The key issue in this analysis is control.  There are many factors that can indicate whether a person is an employee, but the most important factor is control.  Recently, the Eleventh Circuit Court of Appeals found that stagehands (for concerts, plays and other entertainment events) were not employees of a referral service.  Crew One Productions, Inc. v. National Labor Relations Board, No. 15-10429, 2016 WL 403201 (11th Cir. Feb. 3, 2016).  In that case, Crew One referred stagehands to producers of events.  Crew One required the stagehands to attend an orientation session and comply with producer policies, and also provided workers’ compensation insurance.  The NLRB found that the stagehands were employees of Crew One and entitled to form a union, but the Eleventh Circuit reversed that determination.  While the Court reviewed numerous factors, it emphasized Crew One’s lack of control over the means by which stagehands performed their work.  That control was exercised by the producers, not Crew One.  As a result, the Court found that the stagehands were independent contractors who were not entitled to form a union.

In contrast, the Alabama Court of Civil Appeals found evidence that a truck driver was an employee for purposes of the Alabama Workers’ Compensation Act in Jenkins v. American Transport, Inc., No. 2140153, 2015 WL 6111 840 (Ala. Civ. App. Oct. 16, 2015).  In that case, the truck driver signed an agreement expressly declaring that he was an independent contractor.  But, the Court looked beyond that agreement and found that American Transport controlled the manner in which the truck driver performed his job.  Among other things, the Court found that American Transport prohibited truck drivers from loading and unloading cargo, or allowing anyone to touch cargo on their trucks.  The Court also found that American Transport provided license plates and trailers to the drivers.  Thus, the Court found sufficient evidence of control to require a trial on whether the truck driver was an employee.

The Jenkins and Crew One cases demonstrate that your independent contractors must be truly “independent.”  Even if you and your worker sign an agreement calling them an “independent contractor,” a court can look beyond that agreement, and particularly examine control, to determine if they are an employee.