There's no denying that misclassifying an employee as an independent contractor is a costly mistake to make. FedEx recently agreed to settle allegations of misclassification of its drivers as independent contractors for $3.05 million. The settlement includes compensation for underpayments made to the Massachusetts Department of Revenue and individual payments to the 13 drivers specifically named in the Massachusetts attorney general's original citation.
When deciding whether a worker is an independent contractor, the general rule of thumb is that the more control a company exerts over the worker, the less likely it is that they are an independent contractor. To assess the degree of control, the IRS separates control factors into three categories: behavioral control, financial control, and type of relationship.
In Nationwide Mutual Insurance Co. v. Darden (503 U.S. 318, 1992), the U.S. Supreme Court weighe...(register to read more)