Independent Contractor or Employees

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Learning Objectives 1. What is the difference between an employee and an independent contractor? Independent contactor works for, and receives payment from, an employer but whose working conditions and methods are not controlled by the employer. An independent contractor is not an employee but may be an agent. Seven criteria to be a contractor include: • Worker can exercise control over details of work. • Worker’s occupation is distinct from that of employer. • Worker does not follow employer’s direction and instead works without supervision. • Worker provides his own tools. • Worker is employed for a short-period of time, usually only for the duration of a single job or project. • Worker is paid for completion of the job rather than time worked. • Worker performs work requiring high skills or significant training. 2. How do agency relationships arise? Agency relationships arise via agreement of the parties, by ramification, by estoppel, or by operations of law. The agreement generally does not need to be in writing nor does it require consideration. Agency relationships formed for an illegal purpose or contrary to public policy are not enforceable. 3. What duties do agents and principals owe each other? Duties of the agent: • Performance- The agent must use reasonable diligence and skill in performing her or his duties or use the special skills that the agent has represented to the principal that the agent possesses. • Notification- The agent is required to notify the principal of all matters that come to his or her attention concerning the subject matter of the agency. • Loyalty- Agent has a duty to act solely for the benefit of the principal and not in the interest of the agent or a third party. • Obedience- Agent must follow all lawful and clearly stated instructions of the principal. • Accounting- The agent has a duty to make

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