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Avoiding the Employment Relationship

In order to avoid the effects of the workers' compensation system, some employers will deliberately categorize a person as an individual contractor instead of an employee. Some individuals may even categorize themselves as individual contractors, preferring to reject the compensation system. Whether this categorization is successful, however, turns not just on the name given to the employment relationship. Rather, each relationship is examined on its own facts and will be decided based on the conduct exhibited between the parties as well as the work contract entered into between them.

The parties' contract, and their actions in furtherance of the contract, can be a powerful indicator of the nature of the employment relationship. Though the parties may term the individual an "individual contractor," if the employer retains the right to control the individual's work, both the process and the result, it is likely the individual will be found an "employee." Likewise, even though the parties' contract attempts to establish a partnership agreement, the individual will still likely be found an "employee" if he can be dismissed without cause, his compensation is static and unaffected by whether the business is doing well, and he has little, if any, control over the operation of the business.

Another key component to determining the true relationship between the parties is to ascertain whether the work performed by the individual is generally performed by an independent contractor. Sometimes, the nature of the work can be identified merely by looking at the number of people involved. In one case, over fifty individuals entered into a partnership agreement with their former employer in order to work at a quarry. Despite the agreement, the individuals were found to be employees because it was nigh impossible for over fifty people to share equally in the management of the operation. Some states have statutorily decided the question by enacting a provision providing that where many people band together for the purpose of performing work on a particular job, they are employees of the person or entity for whom the work is being performed.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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