Whether payment is by time or by the job.Whether one employee is engaged in a distinct occupation or business.Control of the manner in which work is to be done.The courts look at the following factors. Again, the test for an independent contractor as opposed to an employer/employee relationship is one of common law. In an effort to avoid an employer/employee relationship, some businesses are hiring independent contractors. In this type of situation, it is very difficult for an employer because usually that employer does not have workers compensation insurance for the borrowed employee. Under the factors I have previously mentioned, most courts would determine that the worker is an employee of Acme Company. Without a contract clearly designating the responsibilities of the parties, the court would rely on common law. Under these facts, most employers would think they have no workers compensation liabilities since they hired a “temp” from Beta Agency. Further, Acme has the right to send the worker back to Beta Temporary Agency if that worker is not doing a good job. The Acme Company supervises the employee and directs his daily work. A court looks at all of the factors as established by the facts of the case and then makes a value judgment as to whether or not an employer/employee relationship exists.Ĭonsider this example: Acme Company hires an employee from Beta Temporary Employer Service. The loaned employee’s possession of a skill or special training required by the work for the second employer and employment at a daily or hourly rate for no definite period.Īs can be seen by these factors, the common-law test for an employer/employee relationship is one of balance.The original employer’s right to select the employee to be loaned and to discharge that person at any time and send another person in his place.Facts which indicate that an employee remains in the original employer’s service include the following.It is enough to establish the employer/employee relationship if the employer has the right to control the employee’s manner of performance of work regardless of whether the right is ever exercised.Whether or not the transferred employee becomes the employee of the second employer depends on whether the first employer passes to the second employer not only the right to control the employee’s work, but also their manner of performing it.The person in the general employ of another can be transferred to another employer and become the employee of the second employer.Some of the factors that courts have used to determine this relationship are as follows: Initially, 35 states use the common-law method of defining the employer/employee relationship. Defining the Employer/Employee Relationship By doing so, however, employers risk increasing their workers compensation liability. Employers are beginning to use temporary agency workers, independent contractors, and leased employees to enhance their competitive advantage. In today’s business world, this traditional relationship is being replaced to meet flexible labor needs. In the traditional employer/employee relationship, an employer hired, supervised, and paid the employee. This relationship, in the past, had a very simple definition. Business has to be more flexible in our global economy and, as a result, the traditional employer/employee relationship is being eroded. In these changing business times, it is sometimes very difficult to discern who the real employer is with regard to the employer/employee relationship. It is a basic fact that an employer or institution does not have to pay workers compensation if the person injured is not an employee. This article explains the common-law method of defining the employer/employee relationship and provides cost saving tips for risk management. The traditional employer/employee relationship is being eroded as employers turn to temporary agency workers, independent contractors, and leased employees to enhance their competitive advantage. In these changing business times, it is often difficult to discern who the real employer is with regard to the employer/employee relationship.
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