Control key to independent contractor status

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in Compensation and Benefits,Hiring,Human Resources

Employers sometimes use independent contractors as a way to lower their benefits and other labor costs. But that kind of economizing can turn out to be quite expensive if a court decides that the independent contractor is really an employee.

One of the deciding factors in such cases is how much independence a worker has to control his work. In short, does the employer exert a great deal of control over how the alleged independent contractor performs the work? The greater the employer’s control, the greater the likelihood that the “independent contractor” is really an employee.

Recent case: Walter Huggins was sleeping in the back of a truck being driven by Estaban Gutierrez, who was hauling packages for FedEx. Huggins was injured when Gutierrez rear-ended another truck. Huggins sued FedEx.

But Gutierrez wasn’t directly employed by FedEx. Instead, he worked for a company that had agreed to provide independent contractors to drive trucks marked with the FedEx logo, while wearing FedEx uniforms and complying with FedEx work standards.

Huggins argued that Gutierrez and the company that held the contract with FedEx weren’t working as independent contractors. If that were the case, then they could be liable for Huggins’ injuries.

A court agreed. It found there was enough evidence that FedEx controlled the contractor’s work—including the truck markings, uniforms and workplace requirements—to keep the case moving forward. It concluded that Gutierrez was probably performing services central to FedEx’s business. (Huggins v. FedEx, No. 09-3144, 8th Cir., 2010)

Final note: If you are considering hiring an independent contractor to perform services on behalf of your organization, have your attorney review all the arrangements.

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