See Part I here.
In plain language, if the claimant is an individual and spends his or her productive (working) time working and being paid by only one source, that source is probably an employer and the individual is probably a law-protected employee. The fact that the claimant has special skills and could be using them on behalf of other sources of pay usually does not matter if the claimant is working most workweeks for only one payor.
The most important factor under DOL rules (which state courts follow) is the extent to which the individual worker is economically dependent on the source of payment. Importantly, the rule does not specify how long the economic dependency must last. If the worker was economically dependent on the defendant when the dispute arose, that is typically sufficient to suggest an employer-employee relationship.
Another important consideration is related to the first. If the claimant, by working for the defendant, is receiving a set amount of money and the relationship does not involve a risk of loss for the claimant, that also weighs in favor of employee status.
As in many other legal contexts, a written agreement that the claimant is an independent contractor is worthless if the facts show otherwise.
There are some quirks. An example is when a group of unincorporated workers, led by a spokesman, undertakes, for instance, to install a roof for a fee to be paid to the spokesman on the assumption that it will be divided among the workers when the job is completed. In the vast majority of such cases, each worker is found and held to be an employee. An FLSA collective or multi-plaintiff action on such facts can be very expensive for the person or company that thought it was getting a beneficial bargain. One reason for that is the payor will have no records of hours worked per worker, in which case the aspiring employees can admissibly offer estimates of their overtime hours.
One thing the mediator may choose to ask in such cases is whether the group is licensed, insured and has workers’ compensation. A negative answer tends to indicate employee status for the workers.
It is hoped that the foregoing will be helpful in mediating and settling employment cases in which this issue is raised.
For more information about author Robin Fawsett or to book a mediation with him, contact his case manager, Mariah Wilson, at mwilson@uww-adr.com or 800-264-2622.