Employee/contractor question hinges on employer control

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in Employee Benefits Program,Employment Law,Human Resources,Leaders & Managers,Performance Reviews

Katherine Kerr, a television stage manager, worked on a free-lance basis for a production company, which provided broadcast personnel to TV stations. After a few years on the job, the production company sent her a letter saying that, for tax purposes, she would now be considered an "employee."

While working on TV broadcasts of Chicago Cubs' baseball games, Kerr claimed she was sexually harassed by cameramen who would take gratuitous footage of women spectators and then make sexual comments over the communications equipment.

She complained both to the production company and the TV station (WGN). Four months later she was fired. She sued, claiming hostile work environment and retaliation.

Both companies sought to dismiss the case, saying Kerr was an independent contractor, not their employee, so they weren't liable. WGN was successful in getting its part of the case tossed out, proving that the station didn't exercise any control over her duties.

But the production company wasn't so lucky. The court let that case proceed, saying that Kerr was an employee because the company gave her assignments, direction, performance reviews and required her to commit to the entire baseball season. The production company tried to claim it treated her as an employee only for tax purposes. That argument struck out. (Kerr v. WGN Continental Broadcasting Co., No. 01 C 7196, N.D. Ill., 2002)

Advice: Beat the court to the punch: Avoid a lawsuit by taking time now to classify workers correctly. Look at federal and state law. (See box below) The rising cost of employee benefits is leading more companies to shoehorn workers wrongly into the "independent contractor" category.

Courts will look closest at your company's degree of control over the work performed. The more control you exert, the better chance the person will be considered an employee. Courts also will look at the worker's opportunity for profit and loss and the degree of independent initiative required to do the job.

To maintain independent-contractor status, keep ties between the company and worker to a minimum. The closer a worker is linked to you, the more likely courts will rule that an employer-employee relationship exists. Courts won't rely on labels, they'll look at the reality of the situation. Merely calling a worker an employee isn't enough to make her one.

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