DLLR's Division of Labor and Industry

 

Case Studies - The Maryland Guide to Wage Payment and Employment Standards

 

The following three case studies are generalized examples of situations where the question of employee or independent contractor commonly arise. They are by no means comprehensive, and illustrate the operation of only some of the factors applied in making the distinction.

A. A company runs a referral service for physical therapists, where hospitals or other health care organizations call to obtain temporary workers in that field. When an order is received, the company sends out a physical therapist from its list. The client health care organization pays the referral company who, in turn, keeps an amount for its overhead and profit and pays an hourly or daily amount to the physical therapist. Although the physical therapist is not directly supervised by the referral company, the company maintains the right to expect adherence to acceptable performance standards and to discharge the physical therapist on any adverse reports from client health care organizations.

The referral company's right to discharge, together with its administration of the contract with the client health care organization and its payment of wages to the worker, appear to indicate that the physical therapist is most likely an employee and not an independent contractor.

B. A general contractor hires a painter to paint a new house. The general contractor is not, herself, a housepainter. The painter uses his own tools, obtains his own materials, is free to hire helpers if necessary, comes and goes when he likes (as long as he gets the job done properly and on schedule), and bids for other jobs during the period he is performing the job for the general contractor.

The painter appears to be in business for himself. The general contractor provides no assistance or direction to the painter in the performance of the job, but is only interested in the end product. The painter is most likely an independent contractor and not an employee.

C. A truck owner hires a driver to deliver loads the owner has contracted to haul for a large transportation company. The driver is free to take the truck home with her but is instructed to leave it parked on the street. The driver is free to devise her own routes, reject any load she wishes, and work her own hours within the constraints of the company's deadlines. She is also free from direct daily supervision, merely reporting to the owner on a weekly or bi-weekly basis. The owner pays all bills on the truck including fuel, tolls, insurance and maintenance. The owner pays the driver 30% of the gross receipts.

Although some elements exist which would seem to point to the driver as an independent contractor, other elements outweigh them including the owner's control over the truck, "hiring" of the driver, and control over the contract with the transportation company. On balance, therefore, the driver is more likely an employee than an independent contractor.