Case study employee vs independent contractor

Case study employee vs independent contractor

Case study employee vs independent contractor

Employment laws are established to specify the relationship between an employer and employee. The benefits, relationship, and rules offered are reviewed and agreed upon from both sides in a contract agreement signed before the employee or independent contractor starts to perform their work for the assigned company. The law establishes and exposes the differences between an employee and an independent contractor to control and set a professional relationship between the employeer and the employees or workers. Having these clarifications, is important in a company to avoid future legal repercussions and promote a space for work.

There are two cathegorizations for a worker, employee and independent contractor. There is set juristiction (law) that helps in creating distinction between the two. One of the rules is that is more likely an agent is considered an employee when the principal has more control over them (Beatty, Samuelson & Bredeson, 2013). There are several elements that the courts consider when determining if an agent is an employee or independent contractor. These elements are that the employer supervises details of the work done and the ownership of any propriety or tools needed to perfom the job.

Furthermore, the agent works 40+ hours (full time) for the principal, and the agent receives a salary not a fixed pre-agreed pay (Beatty, Samuelson & Bredeson, 2013).

The differences between the employee and the independent contractor, is based on the aspect that the business controls an employee but does not control an independent contractor. Employer controls most aspects of how an employee performs its work, whereas independent contractors signs a contract which consists of delivering a service or product previously agreed upon. An independent contractor is allowed to work freely, whereas an employer works under supervision from the employer (Torres, 2015). An employee is paid hourly and has a guaranteed wage for each of the hours worked. An independent contractor pay is previously established in the contract for the service or product provided (Torres, 2015). Therefore, these are the rules the law established to distinguish between an employee and independent contractor.

To determine if Joan is an employee or an independent contractor it is important to analyze the work perfomed by Joan and how this work is getting done. Joan is considered as an independent contractor by the principal and therefore entered a contract as one. This agreement states and agrees that Joan is an i.c. working for Madrid and Berne’s. Joan offers services in the company for a specified duration of time in the contract. Joan was paid a commission based on the work performed as provided in the contract agreement while only working on assigments given by Madrid and Berne’s. Joan has no office nor materials needed to complete the job, Madrid and Berne’s have given Joan additional office space to work from.

The key factors determining classification in the scenario above have been presented in this course. Although Joan is considered to work as an independent contractor for many reasons including working on a weekly basis, and was paid weekly for the services done for the company, and not on monthly basis as for the case of an employee. The author of this article states that “an independent contractor is paid by the job, lump, sum, or by commission for services rendered as agreed upon in the contract for services” (Torres, 2015, p. 5), this is why Joan is considered to be an independent contractor under this scenario. This key factor is that althought some criteria are met for Joan to be an independent contractor, many issues arise ethically. For example, she could be taking customers from Madrid and Berne’s and convincing them to work directly for her, for a reduced fee. In addition, another key factor is that she was not provided a specific office to do her work and also used Madrid and Berne’s equipment and supplies. Which in fact is a clear violation of the criteria used to determine and independent contractor. Furthermore, Madrid and Berne’s have so much to lose by not making Joan an employee.

Madrid and Berne’s are fully relying on Joan’s morality and work ethic to ensure she is not taking advantage of the company she is working for. This can be easily fixed by simply avaraging out the commission given to Joan and instead transforming that into a bi-weekly wage. In that case, it would make sense to provide Joan with an office and a place to work. Furthermore, Joan would now be kept under check to ensure she is not swaing customers to go directly through her business.

References

Beatty, J. F., Samuelson, S. S., & Bredeson, D. A. (2013). Introduction to business law.

Mason:           South-Western Cengage Learning.

Torres, C. (2015). Employee or Independent Contractor. Retrieved from http://www.myhrspecialist.com/wp-content/uploads/2016/03/Employee-or-

Contractor