Thursday, March 12, 2009
Are Your Stable Workers Independent Contractors or Employees?
Whether your barn workers are considered to be employees or independent contractors is a complex test of facts and circumstances. Here, we examine the common law factors in the context of relationships between a barn and its stall cleaners. In each A situation, the stall cleaners are more likely to be considered employees, and in each B situation, the stall cleaners are more likely to be considered independent contractors. The more "A" factors a barn has, the more likely its stall cleaners will be considered employees. The more "B" factors a barn has, the more likely its stall cleaners will be considered independent contractors.
How Does the Barn Hire Its Workers?
The contractual relationship between the parties can affect the determination of whether a worker is an employee or independent contractor, especially when the determination would not be clear based upon the other factors.
A. Big Barn decides its needs help cleaning stalls, so ita manager, Hapless Hannah, places a classified ad in the local paper. Larry Lieabout and Slacker Sarah answer the ad and accept Big Barn's offer of full-time employment, with health-care benefits (yes, this is fictional). Hannah gives Larry and Sarah an employment agreement to sign.
B. Sizable Stable also needs help cleaning stalls. Its manager, Fearless Frieda, has seen an advertisement on the local feedstore bulletin board for Manure Eliminators, a stable cleaning service. Frieda engages Manure Eliminators, and the parties sign an independent contractor agreement.
How Extensively Does the Barn Train Its Workers?
The more training the barn provides for its workers, the more likely they are to be considered employees.
A. On Larry's and Sarah's first day of work, Hannah introduces them to Peter Cedar, the "Lead Stall Maintenance Technician." Larry and Sarah shadow Peter for two weeks, during which time he instructs them in great detail about the desired shavings depth, amount of shavings banked against the rear stall wall, and the particular behaviors of each horse. Larry and Sarah work under Peter's close supervision until Peter is satisfied that they understand his extensive requirements.
B. Frieda is relieved to have Manure Eliminators on board, because she's received glowing references from other barns about the skill and professionalism of ME's employees. When the ME workers arrive for their first day, Frieda gives them basic instructions and turns them loose to do the work.
Does the Barn Provide Equipment and Supplies for Its Workers?
The more equipment and supplies the barn provides for its workers, the more likely the workers are to be employees rather than independent contractors.
A. Peter is very particular. He insists upon personally selecting the bedding, and Big Barn supplies all of the manure forks, wheelbarrows and other equipment used by Larry and Sarah to clean the stalls at Big Barn.
B. As long as the stalls are cleaned and bedded regularly and Sizable Stable's clients are happy, Frieda is not so fussy about how the work gets done. ME supplies all of Sizable Stable's bedding needs, and its workers bring their own equipment.
Does the Barn Reimburse Its Workers for Business Expenses?
If a barn reimburses its workers for business expenses, those workers are more likely to be considered employees.
A. Big Barn's tractor is an ancient relic and is always breaking down. Fortunately, Larry is a talented mechanic. He regularly fixes Big Barn's tractor and Big Barn reimburses him for all the parts he purchases.
B. Sizable Stable has a tractor that ME uses to compact the manure pile. Part of ME's contract includes maintaining the tractor. Sizable Stable does not reimburse ME for the cost of parts required to maintain the tractor.
Do the Barn's Workers Have Any Control Over Whether They Make a Profit?
The less control your workers have over whether they make a profit or loss, the more likely they are to be employees rather than independent contractors.
A. Larry and Sarah are both paid by the hour, and there is a limited number of hours that they can work.
B. ME is paid a contract price for the job, based upon the number of occupied stalls. ME has control over its profits because it controls how long the job takes, how many workers it sends to do the job, and what its materials costs are.
Do the Workers Have Set Hours?
Setting hours is an exertion of control by the employer that makes it more likely the workers will be considered employees.
A. Given Peter's particularity about the stalls, he insists that all stalls must be cleaned between the hours of 6 a.m. and 8 a.m., and again between the hours of 4 p.m. and 5 p.m. every day. In between stall cleanings, he has an extensive list of other areas to be cleaned.
B. Frieda and ME have decided that ME can clean the stalls whenever it likes, as long as each stall is clean by 3 p.m. Sometimes, ME comes in the morning, and sometimes ME comes in the afternoon.
Do the Workers Work Full-Time?
The less opportunity the workers have to perform work for others, the more likely they are to be considered employees.
A. Although Larry and Sarah have several "free" hours each day and work a bit less than 40 hours per week, their days are so structured by Peter's strict schedule that it would be impractical for them to do work for another employer.
B. Because ME's work for Sizable Stable is limited in scope, ME is free to, and does, contract with other barns in the area.