Distinguishing Between an Employee and an Independent Contractor

Distinguishing Between an Employee and an Independent Contractor

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A worker’s status as either an employee or an independent contractor is of utmost legal significance, affecting various areas of liability, and is therefore crucial for an employer to understand the distinctions.

In Minnesota, the most significant factor in determining whether an individual working for them is an employee or an independent contractor is the degree of control the employer holds over the method and manner of the worker’s performance. This control can be behavioral in nature; a worker who is required to work at a certain time or place or trained to work in a specific way is likely to be an employee. This control can also be financial in nature; if business and travel expenses, ownership of work equipment and facilities, and realization of financial loss are all burdens of the employer and not the worker, the worker is likely to be an employee. If a worker seeks out business opportunities freely and makes their services consistently available to the general public (as opposed to those services being controlled by one employer), it is more likely that they are an independent contractor than an employee.

There are other factors, relational in nature, which can lend to the distinction between employees and independent contractors. Regular wage amounts over a specific period of time will generally be paid to an employee, while flat rates and job-based rates will typically be paid to an independent contractor. If an employer provides benefits or engages the worker expecting an indefinite employment period, the worker is likely to be classified an employee. Furthermore, if the worker’s role contributes to the key aspect of an employer’s business, it is more likely that they are in the role of an employee.

In the most basic sense, a worker whose method and manner is controlled by the employer is an employee, and a worker who controls the method and manner of their services rendered is an independent contractor. The different federal and state agencies concerned with the distinction between employees and independent contractors will examine the various factors of the relationship differently, but the common law factors given here may give an employer an idea of the category to which an individual will belong.