Independent Contractors: Part 2 of 3 in Workplace Fairness Series

Fairness: the state, condition, or quality of being fair, or free from bias or injustice; evenhandedness:
“I have to admit, in all fairness, that she would only be paid for part of the work.”

We pour our hearts and souls into our work and hope to be treated fairly in return. In the first part of this blog series, I outlined how fairness is often expected but is not a right, in the traditional employment relationship. Because Colorado employment is “at will,” and at will employment is rooted in “master and servant law,” employers have significant discretion in determining how to manage their employees, and in termination of their employment. There are many employment rules that approximate fairness, including federal and state prohibitions against discrimination in the workplace and wage and hour laws, but fairness is not a reasonable expectation in the traditional employeremployee relationship. For more information about this, please Part 1 of this blog series, posted on November 11, 2015.

What About Independent Contractors?
An independent contractor is hired to perform a specific task or project, or for a specific amount of time. While this classification is commonly misused, federal and state laws require that a worker be treated as an employee UNLESS the worker is truly independent in performance of the duties and engaged in his or her independent business. See C.R.S. § 8-73-115 (determination of worker classification for purposes of unemployment eligibility); U.S. Department of Labor Administrator’s Interpretation No. 2015-1, July 15, 2015 (classification under the Fair Labor Standards Act); (IRS). Independent contractors are often more insulated from arbitrary and unfair termination than traditional employees.It is commonly thought that there is a lower commitment level involved in engaging an independent contractor, but in fact the opposite is true. First, because the projects or time periods for which independent contractors are hired must be stated in the independent contractor agreement, an independent contractor is usually engaged for the entire specified time period or project unless the contractor makes a significant mistake (also known as a “breach” of the independent contractor agreement). Second, unless the independent contractor agreement expressly provides for some discretionary termination, an independent contractor may NOT be terminated because the contractor is not “working out,” or is not a “fit” for the company, or due to company finances. Those are the most common reasons for terminating traditional employees. Third, an independent contractor is hired to work independently, and hence may not be terminated based on subjective dissatisfaction with the work. Instead, a business must establish that the independent contractor has performed in a manner that is objectively unacceptable, in order to terminate the contractor prior to the conclusion of the agreement.
BUSINESS PRACTICE TIP: Both parties benefit from a written independent contractor agreement. For the hiring business, benefits include the fact that selection of the independent contractor relationship is more likely to be upheld by a court or administrative agency if there is a written agreement, and that a business may clearly set forth its expectations in a written agreement. For the independent contractor, a written agreement helps clarify the business’ expectations and lets the contractor know what to expect as the project progresses.

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