The Contingent Workforce: Employer Expectations and Legal Realities

Part 1 of this article outlined the different categories of contingent workers. In Part 2, the author outlines the ramifications of misclassifying contingent workers, both in case law and for the IRS.

When individuals are not considered to be employees, employers are often insulated from various discrimination suits. While this is not the main reason an employer hires contingent workers, it can be an added benefit. However, just as it is important to classify individuals properly for benefit and tax purposes, law firms also need to classify individuals properly to ensure they understand the possible discrimination issues up front and will not be unwittingly blind-sided by someone whom they thought was a contingent worker, but who is subsequently determined to be an employee. The U.S. Court of Appeals for the Second Circuit held in Eisenberg v. Advance Relocation & Storage, Inc., 237 F.3d 111 (2d Cir. 2000), that when determining whether a worker is an employee for Title VII purposes, the analysis needs to focus on the “extent to which the hiring party controls the manner and means by which the worker completes [his or] her assigned tasks, and not on how [he or] she is treated for tax purposes or whether [he or] she receives benefits.” The factors used by the court were derived from the 13 factors set forth in the U.S. Supreme Court case, Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989). The court in Eisenberg focused on how the “anti-discrimination laws were not intended to be skirted by the terms of individual employment contracts.”