Are You an Independent Contractor or an Employee? 6 Questions to Ask

How the “gig economy” translates to federal labor laws

Today’s so-called gig economy seems to be populated by a lot of unintentional freelancers.

Are you one of them?

Maybe you work 40 hours a week (or more) for one company, yet you’re classified as an independent contractor.

But that supposed independence comes with a price – and you’re the one paying it. You’re on the hook for your own health insurance. You have to shoulder all of the employment taxes. And forget about collecting disability or taking medical leave if something happens to you.

The question is, is this kind of arrangement legal?

What the Law Says

The Department of Labor (DOL) recognizes that companies may attempt to line their pockets at workers’ expense by classifying employees as independent contractors.

That’s why the DOL has created has a six-question framework for determining a worker’s status. While these questions do not comprise a test that requires yes or no answers, they do provide some insight into the context of your arrangement with the company.

The six questions to ask are:

1. Who’s in charge? How much control does the company have over your work? Are you making independent decisions and/or controlling your work or do you report to a boss and follow instructions?
2. What’s in it for you? Do you have any opportunity for additional profit or loss based on your managerial skills?
3. What do you provide? Do you have an investment in the operation in terms of providing your own equipment and/or employing subcontractors or helpers?
4. What do you bring to the table? Does the service you provide require any special skills?
5. What’s your relationship with the company? What is the degree of permanence of the work agreement? Is the work ongoing and consistent over a period of time or is it temporary and/or project-based?
6. What’s your role in the big picture? Are you providing a service that is an integral part of the company’s business?

What it Means to You

Misclassification of employment status denies people rights and the benefits that they may be legally entitled to as employees.

If you believe that you’re an independent contractor in name only, it’s a good idea to speak with an attorney.

Email us at murphy@phillyemploymentlawyer.com or call (267) 273-1054 for a free consultation to find out more about your rights.