6. Conclusion

In a 2006 report on employee misclassification, the U.S. Government Accountability Office highlighted the many inconsistencies in classification standards and aptly observed that “the tests used to determine whether a worker is an independent contractor or an employee are complex, subjective, and differ from law to law.” That observation remains true today. Indeed, not only do the tests vary, but so does their interpretation. Outcomes may vary from jurisdiction to jurisdiction and indeed from case to case. Navigating this legal maze can be challenging and treacherous. Any company doing business in the United States should tread with caution when hiring independent contractors and seek legal advice to manage the complexities of the legal landscape.

When properly classified, independent contractors can provide businesses with flexibility to address specific operational needs without expanding their employee workforce. In light of increasing state and federal regulatory focus and ever-increasing class action activity, however, it is important that employers (particularly those in scrutinized industries) assess the applicable laws in their jurisdiction, implement lasting changes across their organisation which accurately distinguish between employees and independent contractors, and (where independent contractors are used) document and structure independent contractor relationships in a compliant manner.