Disputes over independent contractor status can be tricky, says Regina Williams, a board-certified human resources lawyer in Austin.
"There have been cases in which a physician goes to work for a medical group as an independent contractor and then claims he or she was actually a full-time employee entitled to certain health insurance and financial benefits," she said.
Having a contract with independent contractors is helpful but not enough to defend a potential lawsuit, according to Ms. Williams.
Under the law, an individual could be considered an employee if he or she doesn't work for any other entities and conforms to the same rules and standards as all other employees.
Determining independent contractor status involves a test, Ms. Williams says.
The Internal Revenue Service (IRS) consolidated its "Twenty Factor" test for determining independent contractor status into 11 main tests. The IRS organized them into three groups: behavioral control, financial control, and the type of relationship of the parties. (See the IRS' "Employer's Supplemental Tax Guide.")
For more information about the tests, visit the Texas Workforce Commission website, which defines each type of control:
- Behavioral control covers instructions the business gives the worker about when, where, and how to work, as well as training the business gives the worker;
- Financial control covers the extent to which the worker has unreimbursed business expenses, the extent of the worker's investment, the extent to which the worker makes services available to the relevant market, how the business pays the worker, and the extent to which the worker can realize a profit or loss;
- Type of relationship delves into written contracts, the provision of "employee-type benefits," the permanency of the relationship, and "the extent to which services performed by the worker are a key aspect of the regular business of the company."
Action, June 16, 2014