Atlanta Employment Attorneys Blog
Commentators sometimes cast independent contractor status as a tool for employers to exploit employees and avoid paying those workers properly. In reality, independent contractor status can provide substantial advantages to workers… and some prefer it. With the U.S. Department of Labor’s new final rule regarding employee-versus-independent-contractor status having taken effect on March 11, independent contractors and hiring entities may wonder what they can do to ensure compliance with the new rule. A good place to start is peaking to a knowledgeable Atlanta wage and hour lawyer.
As noted above, some workers firmly prefer independent status. Independent contractor status allows workers to set their own schedule/hours, control how they do their work, and, in many situations, not have the income limitations that salaried work does.
One industry with many independent contractors is real estate. According to the National Association of Realtors, around 89% of its members work as independent contractors.
The new classification rule assesses a work arrangement in light of six “economic reality” factors
- the opportunity for profit or loss
- the degree of investment by the worker versus the hiring entity
- the degree of the relationship’s permanence
- the degree of control
- the degree to which the contractor’s work is integral to the hiring entity’s business
- the worker’s degree of specialized skills.
There are several key things you can do to ensure that your job (or your workers’ jobs) still qualifies for independent contractor status under the new regulatory framework.
One is an independent contractor agreement. This document should be abundantly clear that the worker is an independent contractor in all regards, including for federal income tax purposes. This is very important, but it is not by itself determinative. Simply having a contract that says “independent contractor” on it will not automatically insulate a hiring entity from action by the Labor Department or potential liability in a Fair Labor Standards Act lawsuit.
Another way to protect an independent contractor arrangement is to ensure that the worker, not the hiring entity, pays the worker’s expenses. If the individual professional is paying for his/her own health insurance, professional insurance, gas, car expenses, and electronic device expenses (computers, phones, tablets, wireless/internet service) that shows that the worker has a greater investment in the work and has an enhanced risk of loss, which tie to two of the factors.
Control is Often a Key Factor
Furthermore, hiring entities can refrain from doing certain things that lean toward employee status. This includes things like declaring team meetings mandatory, providing the worker with tools and materials, and demanding that workers work during set hours at specific locations. For example, some Georgia exotic dancers – who were seeking a declaration of employee status — won their lawsuit in part because their evidence showed that the clubs that hired them told them when to perform, where to perform, and even how to perform – right down to minute details of their appearance and the act of stripping. That proof showed that the hiring entity, not the worker, had control, and degree of control is often a major element in determining the correct classification.
If you’re a sales professional or a sales organization, protecting independent contractor arrangements means ensuring that the sales professionals have substantial control over the sales process. When a hiring entity says “Thou shalt sell during these hours,” or “Thou shalt work from this prefabricated script when selling,” those are hallmarks of the organization’s control (as opposed to the individual) and work against a finding of independent contractor status.
If you have questions about whether a job falls within employee status or independent contractor status, an experienced lawyer can provide essential information. The knowledgeable Atlanta wage and hour attorneys at the law firm of Parks, Chesin & Walbert are here to help guide you through the legal and regulatory framework that exists now that the new rule has taken effect. Get started today by contacting us at 404-873-8048 or through this website to schedule a consultation.