There is a difference between an employee and an independent contractor under both federal and state law. Under applicable laws, an employee qualifies for protection and is guaranteed a certain minimum wage and possibly overtime pay. On the other hand, an independent contractor does not enjoy these protections but is entitled to receive the terms and conditions of his contractual agreement. The reason for this is that the independent contractor is in a position to negotiate the terms and conditions of the contract, including how, when, and how much they will be paid. One of the main questions I am asked by my clients is whether a person is an independent contract or an employee.
An independent contractor is a person who retains control of the job that is to be done. The best example that can be given is that of building a house. In this scenario there is usually a general contractor who agrees with the home buyer to build a certain home, in a certain location within a certain amount of time. This general contractor often hires subcontractors to complete specific types of jobs on the home such as installation of the plumbing or the electrical wires. A subcontractor is nothing more than an independent contractor.
Typically, the general contractor simply hires these independent contractors and gives them the time range in which they can complete the job. The subcontractor can work for straight days to get the job done or they can work in chunks of time. They typically use their own tools and control whether others are hired to help them in completing the job. So long as the job is completed on time, this individual will be paid.
In the home-building example it is usually pretty easy to determine whether a person is an independent contractor or whether they are an employee. However, in many other situations it is much harder to tell. Sometimes a person is called an independent contractor when they are really an employee. The reverse of this is also common. This is important because it determines whether the minimum wage and overtime provisions of the FLSA and certain Idaho laws are applicable. For this reason, Idaho Court’s have established four (4) criteria or factors that are used to determine whether a person is an employee or not. These factors are listed below.
The first factor that Idaho Courts examine is whether there is direct evidence of the employer’s right to control the time, manner, and method of the work.
The next factor that Idaho Courts must analyze is the method of payment. Is the person paid hourly or in a lump sum either before or after the work is completed.
The third factor Idaho Courts consider is which party was responsible for furnishing the major items of tools and equipment.
The last factor to consider is the right to terminate the relationship at will and without liability. The reason this is important is that employees are “at will” and can be terminated or can quit at any time. However, a party under contract is bound to perform and cannot quit.
Other criteria that are examined by Idaho Courts that fall within the four factors listed above are:
- The skills, qualifications, and training required for the job;
- The method of payment, benefits, and tax withholdings that are used or have been followed during the course of the relationship;
- Whether there is a right by the person performing the job to negotiate agreements with other workers;
- The right to decide and to choose sales techniques or other business techniques;
- The right to determine the hours worked;
- Existence of outside businesses or occupations. Is it a person that is hired or the person’s corporation or partnership;
- Is there any special licensing or regulatory requirements for performance of work;
- Whether the work is part of the employer’s general business;
- The nature and extent of the work;
- The term and duration of the relationship; and
- Who has control of the premises.
By analyzing the four factors and the additional criteria that are listed above, Idaho Courts determine whether a person is an employee or an independent contractor.
If you are an employee or an employer and you have questions about the differences between an employee and an independent contractor, we can help. Call us toll free at 877-232-6101 or 208-232-6101 for a consultation with Lane Erickson and the Racine Olson team of Employment Law attorneys in Idaho. You can also email Lane Erickson directly at lve@racinelaw.net. We will answer your Idaho Employment Law questions and will help you solve your Idaho Employment Law problems.
This website includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer for advice on specific legal issues.