User:Rattia1/sandbox

Scenario:

A company has outsourced its app development to an independent contractor. Included in the contract is a non-compete clause and other clauses stating that he is an independent contractor and that all his work related to this company is solely owned by said company. The contractor's work is closely supervised by that company and often he will use its office space. He is not paid on a regular basis, only sporadically when there are projects for him to work on. Eventually, the company decides to end the agreement and hire someone else to do it internally within the company. The independent contractor then sues the company, claiming that he is entitled to benefits.

Answer:

Issue: Is this worker really an independent contractor, or is he an employee?

Rule:

Employee:


 * paid regularly (not by job), supplied tools, under direction & control & on behalf of principal
 * Ideas are automatically owned by the employer
 * Entitled to benefits

Independent contractor:


 * Paid-by-the-job (not regularly), not closely supervised or directed
 * Not entitled to benefits

Analysis:

Here, the company classified a worker as an independent contractor. While he is paid irregularly, he is also closely supervised and uses the company's equipment, which points to him being an employee.

Conclusion:

Therefore, the company should be certain to not just specify the clarification of either independent contractor or employee in the contract, but also treat them accordingly to avoid any potential problems. Ultimately, it would be a judgement call to decide whether he truly is an employee, despite the contract saying otherwise, in which case it could be expensive for the company to provide him the benefits he then would be entitled to.

IRAC scenario+answer into a neutral-voiced summary – for example:

An issue that rises in most companies, especially the ones that are in the gig economy, is the classification of workers. A lot of workers that fulfill gigs are often hired as independent contractors.

As a general principle of employment law, in the United States, there is a difference between an agent and an independent contractor. The default status of a worker is employee unless specific guidelines are met, which can be determined by the ABC test. Thus, clarifying whether someone who performs work is an independent contractor or an employee from the beginning, and treating them accordingly, can save a company from trouble later on.

Provided key circumstances, including ones such as that the worker is paid regularly, follows set hours of work, is supplied with tools from the employer, is closely monitored by the employer, acting on behalf of the employer, only works for one employer at a time, they are considered an employee, and the employer will generally be liable for their actions and be obliged to give them benefits. In order to stay protected and avoid lawsuits, an employer has to be aware of that distinction.