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    Roger McComas   

What is an independent contractor?

For workers' compensation purposes, an independent contractor is an individual or entity that provides a service under a contract without direction and control, or without others having the right to direct and control the provision of those services. Checking progress and establishing timelines for completion of the project is appropriate when spelled out in the contract. The independent contractor controls how the service is provided, who provides it, and the means of accomplishing it. The key requirement is that the independent contractor be free from actual direction and control and free from another's right to direct and control.

The creation or use of a business entity, such as a corporation or partnership, for the purposes of providing services does not, by itself, establish that the entity provides services as an independent contractor. An independent contractor is responsible to the customer only for the contracted result of the work, not the manner or method used to accomplish the work.

Generally, an independent contractor is a person or entity engaged in an independently established business, selling goods and services to a public of his or her own choosing, under his or her own direction and control, and setting his or her own prices. When a person is customarily engaged as an independent contractor, the termination of one contract does not terminate the business or create an unemployment situation for the independent contractor. Normally an independent contractor has customers and prospective customers as a result of advertising and being known by the public as a going business.

Apply the following tests to determine if a person or entity is an independent contractor:

1. Right to control:

Direct evidence of the right to, or the exercise of control

The method of payment (a contractor's pay will relate more to completion of a job)

The furnishing of equipment

The right to dismiss (whether either party can terminate the contract, or the person be dismissed at will, or does the person have the authority to hire someone to work alongside?)

Can the "contractor" accept or refuse a job?

Was a bid made for the job? Were multiple bids taken by the person seeking to retain a service?

Can the independent contractor set their own hours within the time frame of the general contractor?

Can they use their own methods to accomplish the intended result?

Was the contractor subject to monitoring beyond checking progress?

2. The nature of the work:

Consider the character of the work or business.

How much is the work a regular part of the hiring entity's business?

How skilled is it?

Is the work continuous or intermittent?

Is the duration sufficient to amount to the hiring of continuous services as distinguished from contracting for completion of a particular job?

To what extent may it be expected to carry its own accident burden?

If you still are not sure whether you fit the definition of an independent contractor as to workers' compensation law, please contact the Employer Compliance Unit toll free at 888-877-5670 and ask for a coverage investigator.

If you have questions about this webpage, please contact Roger McComas, 503.947.7665.