Independent Contractors

9/12/18


With the rise of the "Gig" economy, Independent Contractors (IC), are coming under increased scrutiny from governments of all levels.

The quick test for Federal IC is three-fold.

1. The contractor can come and go as they please and do the work as they see fit. 

2. The contractor provides the majority of their own equipment and are free to service other clients.

3. The relationship is finite and not assumed to be permanent.

Ohio Code 4141.3.05 focuses on the Federal #1 test.

Other states are choosing to be more aggressive in their determination of contractors. Recently California modified their own requirements which mirrored the Federal Requirements. They added an additional clause to #1, the contractor cannot be involved in the same business as they are doing work. For example, a hair stylist cannot be a contractor in a salon, but an accountant could do accounting work for the salon as a contractor. California also added that the contractor must be independently engaged in an established business (own their own business).

As technology continues to make it easier for companies and contractors to find each other, and the economy continues its shift from traditional employer/employee relationships, I would expect more Local and State governments to look at how they chose to recognize contractors versus employee classifications.

As always, I am here if you have questions or need guidance on how contractors should be characterized or utilized in your business.

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