The Importance of Treating Your Independent Contractors Like Independent Contractors
Many businesses employ people in a variety of capacities, and the use of independent contractors in business is nothing new. Employers often use service providers on an as-needed to basis to accomplish certain tasks on a regular basis, and the internet has created a “gig economy” that has significantly altered the employment landscape. More than ever, it is easier for employers to outsource tasks that were once handled by in-house employees, often blurring the line between true employees and independent contractors – especially when these contractors develop an ongoing relationship with a business.
Employers have certain responsibilities to their employers and also can incur liability for their misconduct. For this reason, it is critical for anyone that hires others to do work for them to ensure that they take steps to prevent what they intend to be an independent contractor relationship from unintentionally turning into an employer-employee relationship. Here are some of the specific issues that can arise if what you think is an independent contractor is actually an employee:
Liability for Employee Negligence
Under a legal doctrine known as respondeat superior, employers can be liable for the tortious acts of their employees that occur during the performance of their ordinary duties – but not for the negligence of an independent contractor. For example, if you hire a delivery driver whose negligence causes an accident while delivering your business’s goods, your business could likely be held liable for any losses that victims sustained. If the driver were an independent contractor, however, the driver himself or herself would likely be held liable.
Employment Law Obligations
In most cases, certain legal obligations are triggered the moment a person becomes an employee. For example, employees are typically entitled to overtime pay for any hours worked in excess of 40 in a given week. Similarly, while independent contractors are exempt from the protections of the Family and Medical Leave Act (FMLA), employees are not.
How Do You Prevent an Independent Contractor from Becoming Classified as an Employee?
As the material above should make clear, it is essential for employers for to take steps to ensure that the people they hire as independent contractors remain classified as such. So, how is this accomplished? Under Texas Law, the primary factor that determines the classification of a person who has been hired to perform is the amount of control the employer exercises over the work performed. Very generally speaking, independent contractors retain control over when, where, and how the work is done. On the other hand, in an employer-employee relationship, the party purchasing the services performed has the right to direct the person working, both as to the final results and how, when, and where the work is actually performed. Importantly, it does not matter whether such control is actually exercised, but rather that the employer has the right to exercise it.
If you are hiring people to help you with your business, it is imperative that you speak to a lawyer as soon as you can. Attorney Andrew Weisblatt has been practicing law in the state of Texas for more than 25 years and understands how to help employers develop policies that prevent independent contractors from inadvertently becoming employees. To schedule a case evaluation with Mr. Weisblatt, call our office today at 713-352-0847 or send us an email through our online contact form.