Independent Contractor and Actual Control

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Sample IRAC Analysis

Chapter 2, Question 1, page 56

Note: I am changing the question so that it asks whether the workers are employees under the common law test since the common law test is one of the two tests I want you to focus on.

FACTS:Employer sells magazine subscriptions. Employer hired home workers to find telephone numbers for potential subscribers. These workers were subject to relatively few requirements as to how they were to carry out their work, but they were required to sign a contract stating they were independent contractors. Employer also hired in-house employees to do the same work.

ISSUE:Are the home workers employees under the common law test?

RULES:Under the multi-factor common law test, a worker is an employee if the employer either actually controls, or retains the right to control, where, how, or when the work is done.

APPLICATION:Even though the requirements were "relatively few," the
employer did subject the workers to some requirements as to how they did their work. This is a form of actual control. Additionally, the employer provided the workers with the names and addresses to be researched. The workers were not free to find potential subscribers from their own sources. This is another form of actual control. It's true that the workers set their own hours and used their own homes and phones, factors that could indicate independent contractor status. However, the employer's actual control of how the work was performed would override the fact that the workers could set their own hours and workload, and the fact that they used their own equipment (homes and phones).

Under the common law test, it is the employer's actual control, or retained right to control, when, where, or how the work is done that determines worker status, not whether there is a contract defining the relationship.

CONCLUSION:...
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