The US Department of Labor recently issued new guidelines to help clarify the long standing confusion around the question: When is a person properly classified as an Independent Contractor and when are they an Employee? Throughout the years, there have been a number of overlapping and sometimes conflicting standards used by various government agencies, the IRS, the Illinois Department of Employment Security, the Department of Labor, state and federal courts etc. Hoping to clear up some of the uncertainty, the DOJ has issued an analysis explaining how the distinction should be made.
The DOL evaluation boils down to a set of six factors, each of which is supposed to carrying equal weight. When considered together, these factors should reflect the economic reality of the situation. Based on the DOL's position, an overwhelming majority of individuals would be classified as "Employees" rather than Independent Contractors.
The factors used by the DOL include: (a) the extent to which the work performed is an integral part of the employer's business; (b) the worker's opportunity for profit or loss depending on his or her managerial skill; (c) the relative investments of the employer and the worker; (d) whether the work performed requires special skills and initiative; (e) the permanency of the relationship; and (f) the degree of control exercised or retained by the employer. Each of these factors is to be assessed in the context of the greater question when determining whether a worker is economically dependent on the employer. If that is the case, they should most likely be considered an employee.
Classification of an individual as either an employee or an Independent Contractor can have a dramatic impact on both businesses and individuals. Furthermore, the U.S. Department of Labor, as well as the Illinois Department of Labor are extremely active in enforcing "misclassification" actions. Employers must take note of this development and examine all working arrangements so as not to be caught misclassifying individuals.
In response to these recent developments, Bellas & Wachowski has created a new web page explaining the new Independent Contractor vs Employee clarification factors in detail.
Bellas & Wachowski is a client-oriented firm, giving each client close attention and service. We want to get to know you so that we can fight for exactly what you need. Our attorneys are available to clients and always respond quickly to calls. Please contact us today with any questions you have about employment law at www.bellas-wachowski.com or call William P. Boznos (847) 823-9030 x212.