Example of facts tending to show an employment relationship:
- Company owns Driver’s truck, tells him where he has to go for maintenance.
- Company sets Driver’s schedule (i.e., Company requires him to work six days on and two days off).
- Company schedules pickup and delivery of Driver’s loads.
- Company gives Driver preferred routes for his hauls, and if Driver wants to change the route, he has to get permission from Company first.
- Company instructs Driver on how to deliver loads.
- Company monitors Driver’s truck by GPS.
- Company holds all required licenses in Company’s name.
- Company prohibits Driver from having a passenger.
- Company prohibits Driver from taking any loads for another company.
Example of facts tending to show an independent contractor relationship:
- Driver works under minimal supervision of Company.
- Driver can hire others to haul for him.
- Driver can work any schedule.
- Driver can take any route he pleases.
- Driver has required licenses in his name.
- Driver can pull for other companies.
These factors were taken directly from a Labor Commissioner decision finding that a driver was an employee, not an independent contractor. This particular employee was awarded well over $100,000 in his claim for unreimbursed business expenses against the trucking company he worked for.
The Type of Work Performed vs. The Employer’s Business Model
Another factor in the independent contractor vs. employee test is “whether the person performing services is engaged in an occupation or business distinct from that of the principal.”
Analysis: What type of business is the alleged employer in? If the alleged employer is a trucking company and the driver is a trucker, then they are in the same industry. But if the alleged employer makes TVs and the driver hauls the TVs to a distributor, then the alleged employer and driver are in possibly different industries (manufacturing vs. trucking).
Example of facts tending to show an employment relationship: Petroleum hauling company uses driver to haul petroleum.
Example of facts tending to show an independent contractor relationship: Book printing company uses driver to take printed books to a distribution point.
Is the Work Performed Part of the Regular Business of the Trucking Company?
Another factor in the independent contractor vs. employee test is “whether or not the work is part of the regular business of the principal.”
Analysis: If the driving is something that is part and parcel of what the alleged employer does as a business, then there would be a higher likelihood that the driver is an employee.
Example of facts tending to show an employment relationship: Petroleum hauling company uses driver to haul petroleum.
Example of facts tending to show an independent contractor relationship: Book printing company uses driver to take printed books to a distribution point.
The Place of Work & Equipment Used
Another factor in the independent contractor vs. employee test is “whether the principle or the worker supplies the instrumentalities, tools, and the place for the person doing the work.”
Example of facts tending to show an employment relationship:
- Company supplies Driver with a truck and a place to park it.
- Company provides maintenance services for the truck.
Example of facts tending to show an independent contractor relationship:
- Driver has his own truck and parks it anywhere he pleases.
- Driver can take the truck anywhere for maintenance.
The Driver’s Use of Their Own Equipment
Another factor in the independent contractor vs. employee test is “the alleged employee’s investment in the equipment or materials required by his task.”
Analysis: An independent contractor usually has their own equipment. In this case, it would be a truck, which Driver owns.
Example of facts tending to show an employment relationship: Company owns the truck Driver uses.
Example of facts tending to show an independent contractor relationship: Driver owns the truck that he uses to haul for Company. (If the Driver leases the truck from Company, it may not really be a lease. Company still owns the truck in most cases.)
The Skill Required of the Driver
Another factor in the independent contractor vs. employee test is “the skill required in the particular occupation.”
Analysis: If the skill required for a job is very high, then the less likely the worker is an employee.
Example of facts tending to show an employment relationship: Driver works for Company as a long-haul driver.
Example of facts tending to show an independent contractor relationship: Person works for Company coding Company’s website database that is used for managing drivers.
The Level of Supervision
Another factor in the independent contractor vs. employee test is “the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision.”
Analysis: An independent contractor usually works with little supervision, only periodic progress checks, and delivers a final product or service. If the worker has to report to a supervisor, who keeps tabs on the worker and directs his/her work on an ongoing, day-to-day basis, then the worker is more likely an employee.
Example of facts tending to show an employment relationship: Driver has to ask his supervisor for approval before taking any time off. All of the customers are the company’s customers. Driver does not bill customers or collect payments from them.
Example of facts tending to show an independent contractor relationship: Driver does not have a supervisor at Company.
The Driver’s Opportunity to Make a Profit
Another factor in the independent contractor vs. employee test is “the alleged employee’s opportunity for profit or loss depending on his managerial skills.”
Analysis: An independent contractor is basically their own business. They run that business to make a profit, like most businesses in the world. If the independent contractor thinks that they can make more money by, for example, hiring more employees or changing routes or using cheaper mechanics, then it is within their discretion to do so. But if there is no real opportunity for the worker to make a profit or loss, then the worker is more likely an employee.
Example of facts tending to show an employment relationship:
- Driver cannot choose their own mechanics, tires, fuel, or insurance.
- Driver cannot subcontract out their work.
Example of facts tending to show an independent contractor relationship:
- Driver chooses their own mechanics, tires, fuel, and insurance.
- Driver can hire others to perform the work.
- Driver can run the business in order to increase their profit.
The Duration of the Services Performed
Another factor in the independent contractor vs. employee test is “the length of time for which the services are to be performed.”
Analysis: If the job is project-based (i.e., one project at a time), it is more likely to be an independent contractor relationship. If, however, the job is ongoing, then it is more likely an employment relationship.
Example of facts tending to show an employment relationship: Driver is hired without any set end date for their services.
Example of facts tending to show an independent contractor relationship: Driver is hired on a project-by-project basis.
The Degree of Permanence of the Relationship
Another factor in the independent contractor vs. employee test is “the degree of permanence of the working relationship.”
Analysis: How secure is the driver’s work? Can they be terminated at any time? If so, then they are likely an “at-will employee.” If, however, the driver works on a project-by-project basis and may not be hired back at the conclusion of the project, they are more likely to be an independent contractor.
Example of facts tending to show an employment relationship: Driver is always on the payroll; their term of employment is indefinite (they can be terminated at will or quit at any time).
Example of facts tending to show an independent contractor relationship: Driver works on a project without any expectation of receiving more work once the project is done.
The Method of Payment
Another factor in the independent contractor vs. employee test is “the method of payment, whether by time or by the job.”
Analysis: If a worker is paid by the job (i.e., $500 per load), they are more likely an independent contractor. If, however, the worker is paid by the hour, they are more likely an employee. This issue frequently comes up in trucker misclassification cases because most are paid by the mile or by the job. Even if a trucker is paid by the mile or by the job, that does not necessarily mean that the trucker is an independent contractor. If the answer to only a few of these factors points to an independent contractor relationship, the worker can still be an employee. It depends mostly on the level of control. The other factors are secondary in comparison to the control factor.
Example of facts tending to show an employment relationship: Driver is paid by the hour.
Example of facts tending to show an independent contractor relationship: Driver is paid by the mile.
The Intent of the Parties
Another factor in the independent contractor vs. employee test is “whether or not the parties believe they are creating an employer-employee relationship.”
Analysis: This factor is important, but not determinative. Do the parties think they are creating an independent contractor relationship or an employment relationship? If the worker believes they are an employee because, for example, they are treated the same as the company’s employees, despite their independent contractor/owner operator title, then the worker may likely be an employee. If, however, the worker truly believes that they are in an independent contractor relationship, then it weighs in favor of finding that they are an independent contractor.
Example of facts tending to show an employment relationship:
- Driver was an employee and Company switched them to an owner-operator, but their duties and job did not change.
- Driver believes they are an employee because Company treats him like one.
Example of facts tending to show an independent contractor relationship: Driver knows that they are an independent contractor and wants to be treated as such.
Work with a Team of Experienced Professionals
If you are an owner-operator and believe you have been misclassified as an independent contractor, you may be owed a substantial amount of money. Contact Karakalos Law now for a free, confidential evaluation of your case.
