Independent Contractors vs. Employees

Certain industries are notorious for hiring “independent contractors” but then treating them as employees. These include cable and satellite television installers, cosmetologists, construction workers, lawn care and landscaping workers, painters, adult entertainers, and home health care workers.

The United States Court of Appeals for the Seventh Circuit, which has jurisdiction over federal cases in Indiana, Illinois, and Wisconsin, has recognized a six-factor test for determining whether an individual is an independent contractor or an employee. The factors are:

(1) The nature and degree of the alleged employer’s control as to the manner in which the work is to be performed;

(2) The alleged employee’s opportunity for profit or loss depending upon his or her managerial skill;

(3) The alleged employee’s investment in equipment or materials required for his or her task, or his or her employment of workers;

(4) Whether the service rendered requires a special skill;

(5) The degree of permanency and duration of the working relationship; and

(6) The extent to which the service rendered is an integral part of the alleged employer’s business.

Secretary of Labor, U.S. Dept. of Labor v. Lauritzen, 835 F.2d 1529, 1534-35 (7th Cir. 1987).

My basic rule of thumb is the more things the employer controls about the manner in which the job is performed, the more likely you are to be an employee. If you work set hours, have a dress code, do not have the ability to set your own prices, are subject to discipline, don’t generate your own business, etc. and are being classified as an “independent contractor,” you should speak with an attorney as there is a decent chance you are not being paid correctly and have might have a claim for unpaid wages.