Law Essay: Benchmark - Employee vs. Independent Contractor

Amber Hummel
BUS- 340
October 3, 2020
Mr.  Lahargoue
Laws and Federal Regulations Governing Employment
The Importance of Differentiating Employees from Independent Contractors
Multiple reasons can be given on why it is important to know the distinctions between employees and independent contractors. One important element of the distinction is on control. Employers must exercise control differently when dealing with independent contractors or employees (Johnson & Everhart, 2011). While an employer may have exclusive control over an employee’s prospects, including taxation and scope of work, the same cannot be said of an independent contractor. With independent contractors, employers must draw lines and limit their control to the standard of work and not how the work will be completed. Failure to adhere to this distinction can trigger conflicts between contractors and employees.
Knowing the distinction between independent contractors and employees also eases the execution of ownership tools tests. In an operational setting, tools can imply equipment, computers, phones, supplies, and materials (Johnson & Everhart, 2011). In general, the manner an individual uses the tools should imply their relationship with the employer. For instance, an employee is allowed to use tools such as space and materials at the employer’s cost. Conversely, if an individual owns or rents tools, he/she is an independent contractor. The other aspect of the test focuses on who bears the costs of tools. Understanding if an individual is an independent contractor or an employee creates a distinction on the cost management of organizational tools.
Key Factors for Determining Employee Classification
Three primary factors define the classification of individuals as either independent contractors or employees. The first among the factors is behavioral control. A relationship is considered to be employer-employee if a worker is told where and when to work (Cihon & Castagnera, 2014). Still, on behavioral control, the degree of instructions also determines the nature of the relationship. Hence, if a worker is given more details in instructions, he/she is highly likely to be an employee. Ultimately, the classification under behavioral control focuses on training. The more a worker is subjected to training, the higher the chances he/she is an employee.
Financial control and the nature of relationships are the other two key factors that define employee classification. The U.S. Department of Labor enforces approximately 180 worker protection laws that range from employee rights to the nature of their employment (Ferrera et al., 2014). Multiple financial control elements imply that a worker is an independent contractor. Some of such factors include being paid a flat fee for services rendered as opposed to regular pay, the ability to offer services to multiple companies, and the opportunity of profit or loss on the part of the worker (Ferrera et al., 2014). The other financial control factors include unreimbursed expenses paid from the worker’s pocket and notable investment in tools that the worker uses. Finally, the nature of relationships is a key factor in the classification. For instance, it can be specified in the c...