How to Determine Independent Contractor StatusTopic: Safety Management
When a company hires independent contractors to perform jobs in your workplace, the status of these workers could make a big difference in terms of your liability should one of them be injured. Are these workers truly independent contractors or are they in effect your employees?
The following factors assistance in determining independent contractor status. It is, however, always wise to check with your company's attorneys concerning contacts and worker status whenever your company hires independent contractors.
- Is the individual under the direction or control of the independent contractor, not your employer, while working in your workplace?
- Does the contractor have the right to control the means and progress of the work except as to final results?
- Is the contractor engaged in an independently established trade, occupation, profession or business?
- Does the contractor have the opportunity for profit and loss as a result of the services being performed for your company?
- Does the contractor hire and pay his or her assistants (if any) and to the extent that these assistants are employees, supervise the details of their work?
- Does the contractor make services available to other customers even if its right to do so is voluntarily not exercised or is temporarily restricted?
- Do any 3 of the following elements apply?
- The individual has a substantive investment in the facilities, tools, instruments, materials, and knowledge used by the individual to complete the work.
- The individual is not required to work exclusively for your company.
- The individual is responsible for satisfactory completion of the work and may be held contractually responsible for failure to complete the work.
- You have a contract that defines the relationship and gives contractual rights in the event the contract is terminated by the you prior to completion of the work.
- Payment to the individual is based on factors directly related to the work performed and not solely on the amount of time expended by the individual.
- Such work is outside the usual course of the business for which the services is performed.
- The individual has an independent contractor status.
If the answer to all or most of the 7 questions above is yes, the individual or entity you are dealing with is likely an independent contractor, not an employee. And this fact can play an important role in limiting your company's liability for injuries to an independent contractor's employees.
Minimize Risks When Hiring Independent ContractorsThe implementation of the Act and emerging economic sectors may lead businesses to make greater use of independent contractors and blur traditional definition of "employment." The Department of Labor and many states are responding with legislation to crack down on business and impose a greater share of the liability for the acts or omissions of their independent contractors.
With more organizations hiring independent contractors to deal with economic, staffing, and business challenges—with typical duties including janitorial duties, building construction and renovation, different production activities, security, and maintenance—it's important to understand the risk of liability your organization could face if those workers aren't properly trained on safety protocols.
Sure, in theory independent contractors are responsible for their activities, including safety, and their liability is not transferred to the company that has hired them. However, in the real world it's not always so black and white. In fact, there are many situations where your organization could be liable.
- Conditions that could result in safety-related liability when you hire an independent contractor to perform services for your organization
- Circumstances that could lead to claims of contributory negligence, negligent en-trustment, and more against your organization
- Examples of "non-delegable duties" and "inherently dangerous activities"
- How to determine if someone is an independent contractor or an employee, and strategies to make sure the relationship is clear
- What OSHA requires when you hire independent contractors
- Tips on how to select safe and dependable independent contractors
- What types of safety expectations to include in your independent contractor agreements
- Factors to consider when your independent contractor hires sub-contractors
- How can you limit the "mixing" of your employees and independent contractor staff on the job site to avoid potential risks
- The three types of documentation you should require before you let an independent contractor perform their services for your organization
- Why it's important to assure that the independent contractor has a process in place for providing first aid and medical care to its workers