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  • Anderson & Associates

Understand which type of “employee” you are to protect your rights

Yen-Yi Anderson, Managing Partner of Anderson & Associates, founded the law firm in January 2014. Yen-Yi Anderson focuses her practice on excellence in business immigration, commercial law, and civil litigation.

Wei-An Wang is a Law Clerk at Anderson & Associates and a contributing author for the Anderson & Associates blog.

Do you really know what type of “employee” you are?

The difference between Employees and Independent Contractors may lead to different protections and different benefits. Read more to understand your rights.

First of all, please take the time to appreciate yourself for working so hard. You know you are a hard worker, but what type of “worker” are you? Depending on your employment status, you have different access to different protections under labor laws and different benefits based on company structure.

There is no hard and fast legal definition that differentiates an “employee” from a “independent contractor”. The Federal Government and State Governments have developed their own tests and factors to determine whether a person falls under the category of “employee” or “independent contractor”. For example, compare the Internal Revenue Service (IRS) and New York State government’s different tests for employment status.

IRS Test

The IRS’s test focuses on the following three categories:

  • Behavioral Control:

    • The type and extent of the instructions.

    • The right to evaluate your work performance.

    • The need of work training or attend meetings.

  • Financial Control:

    • Providing and investing in the equipment or supplies the worker uses in working.

    • Any Unreimbursed expenses?

    • Opportunity for profit or loss?

    • Are you able to provide services to the market?

    • Method of payment.

  • Type of Relationships:

    • The description in the Written contracts. However, it’s not the determining factor.

    • Benefits such as insurance, a pension plan, vacation pay or sick pay have employees. These benefits generally are not accessed to independent contractors.

    • The length of the employment relationship.

New York Test

Based on New York Court decisions, there are various factors to consider when determining the existence of a employer-employee relationship. Generally, the greater the control by the employer, the more likely that you will to be defined as an employee. This is called the common law test, where courts will analyze all factors when determining if a relationship exists.

An employer-employee relationship may exist if:

  • The employer can choose when, where, and how the services to be performed.

  • The employer provides facilities, equipment, tools and supplies

  • The employer directly supervises the services and have the right to approve the work product.

  • The employer sets the hours of work and the rate of pay

  • The employer requires exclusive services

  • The need of work training or attend meetings.

On the contrary, the extent of the supervision, direction and control toward Independent Contractors are generally lesser than Employees. It is not uncommon for independent contractors to even own their own business. They advertise their business, use their own business cards, have their own studio, and pay their own expenses. Most importantly, they assume risks for profit or loss by themselves.

Please note that even if your contract defines you as an independent contractor, it is still possible that you could be defined as an employee. There are cases where the circumstances under which they work may not meet the common law tests, but the relationship is still considered an employer-employee relationship.

To know more about your rights, please stay tuned or Contact Us.


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