What is the Difference Between an Independent Contractor and Employee?

America’s work climate has changed over the last several decades. Companies like Amazon, Uber and Ebay have paved the way in creating a new way to work. There are currently 57 million people who are part of the new “gig economy.” This type of work can be full time or part time and allows people to pick and choose who they want to work for, how many hours they want to put in, and ultimately become their own boss.

Recently after a rash of delivery truck accidents, this new way of working has come under scrutiny. To keep up with growing demand, delivery drivers are being held to impossibly tight delivery schedules and have been involved in serious accidents, causing injuries and deaths. The companies have attempted to avoid any liability for many of these accidents, arguing that because the delivery drivers are independent, they are not liable. In many cases, the position taken by delivery services companies is morally and legally wrong.

What is the difference between an independent contractor and an employee?

This is an evolving area of law. As more and more people move into this type of work, state and federal agencies have increased their scrutiny in classifying workers. Classifying a worker as an independent contractor can benefit a company. Companies who employ independent contractors don’t have to pay payroll taxes, unemployment insurance, or benefits. They argue that they are free from liability if the contractor gets into a work-related collision. Although companies like to describe workers as independent contractors, in many cases the relationship looks more like a normal employer-employee relationship.

There are several different ways to determine whether a worker is an independent contractor or an employee. Both the Department of Labor and the Internal Revenue Service have their own criteria, which varies in accordance to their specific departmental needs. One of the concepts that is evaluated is whether there is “economic dependence” present. In other words, does the individual performing the service derive a substantial portion of their income from the services rendered. For example, is the so-called independent contractor contracting with anyone other than the big online retailer?

 Other factors that are considered include :

  • Financial: How is the worker is paid? Does the employer reimburse the worker for expenses and do they provide the tools to do the job?
  • Contractual: Are there any written contracts between the employer and the worker? Does the worker receive any benefits such as pension, paid vacation or health insurance?
  • Degree of Control: Does the company have control over how the worker does their job?

If the above issues are answered in the affirmative, it is possible that the worker is an employee.

 

Delivery Truck Drivers as Independent Contractors

State and federal laws regarding this issue may vary, and each situation is unique. As this applies to Amazon, WalMart, UPS and other companies who use a gig business model, this can be a grey area. They argue that their delivery drivers are independent contractors, and should an accident occur, they are not liable. 

However, many of these companies assert considerable control about how the workers do their jobs, including:

  • The driver’s routes
  • The delivery schedules, for example same day delivery, 
  • Customer requirements like specific location of delivery,
  • Number of packages that must be delivered in a day or other time deadlines.

Whether the driver is working alone, or through a third-party delivery company, often their primary client, and sometimes their only client is the retailer. In the case with Amazon, workers have commented that everything they did while working was under the company’s control. They were told where to go, how to deliver the packages and how to interact with the customers.

It remains to be seen how these cases will ultimately be decided, as they are pending in court. At Morefield, Speicher, Bachman, LC we believe that many delivery service drivers are ultimately working on behalf of the companies that they are providing delivery services for. And, we believe those retailers should be held responsible for the accidents caused by the drivers they control.

If you or a loved one has been the victim of a delivery truck accident or feel your rights have been violated by being a misclassified worker, please come speak to us as soon as the accident occurs. We are here to ensure that your rights are protected, and you deserve compensation for any injuries you have suffered. Call us today at 913-839-2808.

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