This Guide has been prepared by The Fernandes Law Firm for informational purposes only and does not constitute advertising, a solicitation, or legal advice. The information contained in this Guide is provided only as general information which may or may not reflect the most current legal developments; accordingly, information in this Guide is not promised or guaranteed to be correct or complete. The Fernandes Law Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this Guide.

The use of independent contractors for both short- and long-term projects is an effort to avoid the expense of hiring new employees and/or maintaining staffing levels that may be inappropriate for the business. Independent contractors are also a good way to access persons with specialized skills in a cost-effective fashion that minimizes the legal risks associated with an employment relationship.

While both the commissioning party and the contractor may believe, and intend, that the relationship between them fall outside employment, the real answer lies in the various tests that may be applied to determining the legal classification of the proposed arrangement. Depending on the situation, reference may be made to common law rules, court decisions, industry-specific rules and guidelines, or statutory definitions.

In some cases, the commissioning party may decide that the conditions and provisions that might need to be included in the project contract in order for it to qualify as independent contractor relationship are too onerous, since it would not have the requisite level of control over the contractor’s activities. If, on the other hand, an independent contractor arrangement is desired, the commissioning party must proceed with care in order to avoid the fines and penalties that may be imposed if a governmental agency later finds that the provider was actually an employee.

In this Memo, we examine some of the tests that might be applied to determine if a particular business arrangement will be classified as independent contractor relationship. While the rules are fairly straightforward, they are usually applied on a case-by-case basis, and it is recommended that the parties use a written agreement to memorialize their intent, the rules that will govern the work to be performed and the compensation to be paid.