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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.
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