Question

Jerry works for ABC Company as a salesperson. He is in charge of going out and getting clients, selling the products with his sales pitch, and presenting and completing the contracts with the clients. He also follows up with the clients to see that they are happy. When COVID-19 hit and downsizing occurred, Jerry was laid off. He went to the unemployment office to file for unemployment and ABC Company denied his employment status, saying he was an independent contractor. What things must be looked into to see if Jerry was an employee, or an independent contractor?

Answer 1

To determine whether Jerry should be classified as an employee or an independent contractor, several factors need to be considered. The specific criteria can vary by jurisdiction, but generally, the following factors are examined:

1. **Control over Work**:

- Was Jerry given specific instructions on how to perform his job?

- Did ABC Company dictate his work hours, location, or methods?

- Did he have autonomy in performing his tasks?

2. **Nature of the Work**:

- Did Jerry's work directly align with ABC Company's core business activities?

- Was his role integral to the company's operations?

3. **Contractual Agreement**:

- What did Jerry's contract or agreement with ABC Company specify regarding his employment status?

- Did it mention terms like "employee" or "independent contractor"?

4. **Tools and Equipment**:

- Did Jerry use his own tools, equipment, or resources, or did he rely on those provided by ABC Company?

5. **Financial Arrangements**:

- How was Jerry compensated? Did he receive a regular salary, or was he paid based on sales or contracts completed?

- Did he receive employee benefits such as health insurance or retirement contributions?

6. **Duration of Relationship**:

- How long did Jerry work for ABC Company?

- Was his work intended to be a temporary arrangement, or was it ongoing?

7. **Independence**:

- Could Jerry work for other companies simultaneously?

- Did he have the freedom to pursue other clients or business opportunities?

8. **Training and Integration**:

- Did ABC Company provide training or integrate Jerry into its workforce like other employees?

9. **Tax Considerations**:

- How were taxes withheld? Did Jerry pay self-employment taxes, or were taxes withheld as an employee?

10. **Behavioral and Financial Risk**:

- Did Jerry assume financial risks related to his work, such as investing in inventory?

- Could he incur liabilities in the course of his work?

11. **Termination Process**:

- How was Jerry's employment terminated? Did he have a formal notice period, or was it sudden?

The determination of whether Jerry was an employee or an independent contractor will depend on the overall assessment of these factors. It's important to consult legal or labor experts to make an accurate determination, as misclassifying workers can lead to legal issues and financial penalties.