Making the Determination | What’s the Difference?
Some workers—musicians, artists, food service industry workers and even construction workers—have embraced what is now called the “gig economy” for decades, working a number of short-term or temporary jobs, rather than spending any meaningful time in one job or with one employer. The “gig economy” started to blossom in the 1990s and early 2000s, as the internet and other advancements made it much easier to manage multiple “gigs.” The 2008 financial crisis and the COVID-19 pandemic further accelerated the move away from traditional employer-employee relationships.
The gig economy poses some challenges for employers, with the most complex often being how to classify workers—are they employees or are they independent contractors? The stakes can be high—state and federal labor laws provide substantial protections for workers who are correctly classified as employees. In addition, employers can face serious sanctions for misclassifying employees as independent contractors.
What Are the Key Tests for Determining Whether a Worker is an Employee or an Independent Contractor?
The employee vs. independent contractor distinction is not a new and unique concern of the gig economy. Employers have long had to make such assessments and the test most commonly used has been what is referred to as the “control test,” which looks at the extent to which the employer controls the day-t0-day activities of the worker. How do tasks get completed? Where is work done? Must work be done within certain time frames?
The Fair Labor Standards Act (FLSA) has long used the “economic realities” test, which looks at the extent to which the worker depends on the employer. Does the worker rely on the employer for his or her livelihood?
The other test commonly used is what is commonly referred to as the IRS 20 factor test,” which focus on the relationship between the parties, financial control and behavioral control.
Let Stephen Hans & Associates Advise You Regarding Workers in the Gig Economy
At Stephen Hans & Associates, we have successfully advised and represented many New York City employers many years, helping them meet employment law requirements and protecting their rights in employment litigation. Susan Lacerte, executive director of the Queens Botanical Garden has lauded us for our “dedication, knowledge and experience” and for helping the Botanical Gardens “successfully resolve difficult legal issues with [our] talent, negotiating skills, personal care and attention.”
Our experienced attorneys are glad to answer your questions and provide legal advice. Our offices are conveniently located in Long Island City with easy access from Manhattan.