One of our latest blog posts talked about the U.S. Department of Labor’s memo on the six different economonic realties that determine the difference between an employee and an independent contractor. Some of the first points discussed ask if the work being performed is an integral part of the employer’s business, and if the worker’s managerical skill affects the worker’s opportunity for profit or loss. In discussion of the first question, the memo notes that if the work being performed is an integral part of the employer’s business, then it is more likely that the worker is an employee as they are more economically dependent on the employer. One example used is that if a construction company framing homes hired a software developer to assist in scheduling and tracking, they are more likely to be considered an independent contractor rather than a carpenter, who would be more integral to the company’s buisness.
The discussion behind the second question focuses on whether or not the worker is in business for themselves and if their managerial skills such as hiring others, buying space, materials and equipment can affect their profit or loss. The amount of work available and ability to work extra hours does not key into this decision as much, because both independent contractors and employees can ideally work more if more work is offered or present. For example, if a worker who provides cleaning services does not independently schedule their assignments, advertise, and solicit work from clients, they do not exercise a managerial skill that affects their profit or loss and are most likely an employee. On the other hand, if a worker provides cleaning services but does independently scheudle jobs, hires others, and advertises for new clients, their managerial skills would affect their profits or loss and they would most likely be considered an independent contractor.