Employee vs. Independent Contractor

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Sometimes an employer will try to avoid Workers Compensation benefits by claiming that his employee is not really an employee but an independent contractor instead. It’s happened so many times that a regulation was adopted by the Department of Labor and several cases have come down the pipes on the issue.

The “relative nature of the work test” was “put to the test” in the case of Misyukv Shastitko, AWCAC Decision No 202 (11/4/14). In that case, a long distance truck driver died in a trucking accident. His employers claimed he was an independent contractor and so his widow and orphans were not entitled to workers compensation benefits.  The Board found the trucker was an employee and the commission affirmed the decision based upon the following reasons:

  1. There was a express oral contract by which the trucker was hired as a regular driver for the trucking firm,
  2. The trucker did not have his own truck and he drove exclusively for the trucking firm,
  3. The trucker had no authority to hire or fire other employees,
  4. The trucker did not pay anyone else to help him,
  5. The trucking company exercised control over how the deliveries,
  6. The firm provided the truck and a company credit card for fuel. It also paid for liability insurance on the truck and provided for maintenance and repairs,
  7. The trucker was paid bi-weekly, instead of by the job,
  8. Trucking was the regular part of the employer’s business,
  9. The trucker worked exclusively and consistently for the trucking firm,
  10. The employment was continuous.

This is what the “relative nature of the work” test says:

8 AAC 45.890. Determining employee status

For purposes of AS 23.30.395(19) and this chapter, the board will determine whether a person is an “employee“ based on the relative-nature-of-the-work test. The test will include a determination under (1) - (6) of this section. Paragraphs (1) and (2) of this section are the most important factors, and at least one of these two factors must be resolved in favor of an “employee“ status for the board to find that a person is an employee. The board will consider whether the work

(1) is a separate calling or business; if the person performing the services has the right to hire or terminate others to assist in the performance of the service for which the person was hired, there is an inference that the person is not an employee; if the employer

(A) has the right to exercise control of the manner and means to accomplish the desired results, there is a strong inference of employee status;

(B) and the person performing the services have the right to terminate the relationship at will, without cause, there is a strong inference of employee status;

(C) has the right to extensive supervision of the work then there is a strong inference of employee status;

(D) provides the tools, instruments, and facilities to accomplish the work and they are of substantial value, there is an inference of employee status; if the tools, instruments, and facilities to accomplish the work are not significant, no inference is created regarding the employment status;

(E) pays for the work on an hourly or piece rate wage rather than by the job, there is an inference of employee status; and

(F) and person performing the services entered into either a written or oral contract, the employment status the parties believed they were creating in the contract will be given deference; however, the contract will be construed in view of the circumstances under which it was made and the conduct of the parties while the job is being performed;

(2) is a regular part of the employer's business or service; if it is a regular part of the employer's business, there is an inference of employee status;

(3) can be expected to carry its own accident burden; this element is more important than (4) - (6) of this section; if the person performing the services is unlikely to be able to meet the costs of industrial accidents out of the payment for the services, there is a strong inference of employee status;

(4) involves little or no skill or experience; if so, there is an inference of employee status;

(5) is sufficient to amount to the hiring of continuous services, as distinguished from contracting for the completion of a particular job; if the work amounts to hiring of continuous services, there is an inference of employee status;

(6) is intermittent, as opposed to continuous; if the work is intermittent, there is a weak inference of no employee status.

Keenan Powell has practiced Workers Compensation law in the State of Alaska for over 30 years and has dedicated her practice to Workers Compensation representing injured Alaskans handling hundreds of cases. www.keenanpowell.com.

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