As Michigan residents may know, there may be a number of differences between being an employee and being a contractor for a company. Contract workers may be easier to terminate, receive no benefits and might have to work during holidays. Whether an individual should be classified as an employee or contractor can be an important question for many employers.
In 2014, a case that started in 2006 resulted in a ruling by the National Labor Relations Board stating that FedEx drivers were miscategorized as contract workers when they should have been classed as employees in employee contracts. However, the company may appeal the decision. Cases of this type may remind employers to use caution when classifying workers as contractors or employees.
In a landmark case in the 1990s between Microsoft and its contract workers, a decision stated that the workers were employees because they had been assigned offices, were named in organizational charts and attended functions held by the company. Although these employees had signed papers saying they could not get benefits because they were hired through contract agencies, the court ruled that they were employees under common law and entitled to benefits.
Criteria used to determine the work status of a contractor may include required hours and whether the individual is under the direct supervision of the employer. It may also include whether the employee or employer supplies the tools necessary to do the job.
However, these are only a few of the elements that might differentiate a contractor from an employee. An employer who wishes to be sure that job descriptions are free of anything that might be construed as illegal may wish to consult an attorney. If a job contract leads to employment litigation, the attorney may review the case and work to protect a client's interests in negotiations with the employee.