Employee or Independent Contractor? – If You Have the Right to Control Them, They’re Yours
February 8, 2014
Note: Article written referencing Connecticut Law; however, fundamentals around contractor definition applies in Texas as well.
When we analyze the question whether a worker is an employee or an independent contractor, we usually approach the issue from the point of view of the Connecticut Department of Labor and apply the “ABC” test, or from the point of view of another government agency (i.e., the IRS or the USDOL) and apply the test that agency uses. Attempting to boil those tests down to a simple rule, we tell our clients, “The more control you exercise over the individual, the more likely he or she will be considered your employee.” A recent Connecticut Superior Court case comes at the issue from a different perspective, but vividly illustrates the point. In fact, it goes even farther.
Lorraine Hill was involved in a motor vehicle accident with a dump truck driven by one Kenneth McNail. Mr. McNail was employed by Duncan Services, LLC. That company had been hired as a subcontractor by Michael’s Tree and Loader Service, LLC to remove debris from the roads in Farmington, CT. Ms. Hill sued McNail, Duncan Services, and Michael’s Tree and Loader Service, alleging that McNail was an “agent, servant and/or employee” of both companies. Michael’s moved for summary judgment on the ground that as to it, McNail was an independent contractor, not an employee.
The court observed that as a general rule, an employer is not liable for the negligence of its independent contractors, because the employer has no power to control the manner in which the contractor performs his work. Therefore the work is “regarded as the contractor’s own enterprise,” and the contractor bears the responsibility to prevent risk to third parties, and to compensate them for injuries arising from the contractor’s negligence. But if the employer has the right to control the means and methods of the contractor’s work, then the contractor is an employee, whether or not the employer actually exercises its right. Quoting a 1937 case, the court said: “The independent contractor contracts to produce a given result by methods under his control, while the employee contracts to produce a given result subject to the lawful orders and control of the employer in the means and methods used ….”
Ms. Hill offered evidence to show that Michael’s required its subcontractors to attend daily meetings at which territories were assigned, and weekly safety meetings. Moreover, the subcontractors’ drivers (including McNail) had to file “load tickets” on a form prepared by Michael’s that showed the quantity of debris removed on each trip. The court held that this was enough evidence of Michaels’ right to control the work of Duncan Services’ drivers to raise a triable issue of fact regarding whether McNail was an employee of Michael’s Tree and Loader Service. Summary judgment was denied.
Before you panic, understand that the court has not announced a rule making every employee of every subcontractor also the employee of the general contractor. Denying summary judgment just means that there will be a trial at which the plaintiff will have the opportunity to prove that McNail was subject to enough control by Michael’s Tree and Loader Service that he should be considered an employee. Michaels will doubtless try to show that the type of routine monitoring involved here didn’t give it control over the means and methods of McNail’s work.
But the point you should remember is that it’s not only the actual exercise of control over an individual that makes him or her your employee. It’s the right to exercise control over the individual that moves him or her from the category of independent contractor to employee. Not only does this give you all obligations of an employer under the wage and hour laws, but you are also responsible for the employee’s actions undertaken within the scope of that employment. Think about this when you enter into an agreement with anyone you want to classify as an independent contractor.
The case is Hill v. McNail et al., 2013 WL 6989430 (Connecticut Superior Court, No. CV126013846, December 18, 2013), for the case summary please click here.
Thank you to: Jonathan Orleans