The “duck” test for independent contractors

Earlier this week, FedEx announced that it would pay an astounding $228 million to settle claims that it had misclassified drivers as independent contractors. This news comes on the heals on the Department of Labor’s announcement of pending guidance on independent contractor status.

Meanwhile, on the same day as the FedEx settlement, the Ohio Supreme Court issued its decision in State ex rel. WFAL Construction [pdf], which decided that under the facts presented, individuals working under a construction contract were “employees” for workers’ compensation purposes.

As a technical matter, in Ohio, R.C. 4123.01(A)(1)(c) lists 20 factors to determine whether a person is an “employee” for purposes of workers’ compensation; if 10 of those criteria are met, the worker is an employee. In WFAL Construction, the workers met the following 10 criteria:

1. The individuals were required to comply with instruction from either the owner or an onsite lead carpenter.
2. The services provided by these workers are integrated into the regular functioning of this employer as they do all of the work.
3. The named persons on the various timesheets and logs performed the work personally.
4. The individuals were paid by the employer.
5. Records that were available to the auditor showed that the same workers performed work repeatedly for the employer.
6. The individuals were paid for the specific number of hours worked on a weekly basis.
7. As the employer had a supervisor or foreman on the worksite if he was not present himself, the Committee finds that the order of work was determined by the employer.
8. Given the hourly payments, the workers would not realize a profit or loss as a result of the services provided.
9. The employer has the right to discharge any of these individuals.
10. There is no indication that any of the individuals would incur liability if the relationship ended.

Despite these specific criteria, I have reached the conclusion that the best test to determine whether a worker is an employee or an independent contractor is the “duck” test—if it looks like an employee, acts like an employee, and is treated like an employee, then it’s an employee. I know this isn’t clear guidance, but, much like how Justice Potter Stewart years ago famously defined obscenity, I think you know an employee when you see one. 

So, Department of Labor, bring on your guidance. I doubt it will be any clearer or more workable than my “duck” standard.