Small business owners must make the proper distinctions between independent contractors and full employees. Each status entails certain rights and obligations, and miscategorizing a full employee can lead to costly business litigation claims. While originally conceived as a means of determining whether a worker is part of a company’s Affirmative Action plan, the Darden factors can also tell the difference between a full employee and a non-employee.
The amount of control the business owner retains
Employers exert a great deal of control over workers. For example, an employer in the traditional sense would dictate which assignments are completed and in which order and may even have a say in the mechanisms used for completing assignments. Conversely, an independent contractor would be free to complete work as he or she sees fit, without much (or any) intervention from supervisors or managers.
Independent contractors typically provide a special skill. If in need of bookkeeping assistance, an employer may look for an accountant to perform specific financial tasks on behalf of his business. In this case, the accountant would not be a full employee because he or she is there to provide a specialized skill only. A full employee would be responsible for performing regular business tasks as listed by her or his employment description.
Who provides tools & equipment
Employers are responsible for supplying workers with equipment for the most part. Providing access to supplies and equipment usually points toward an existing relationship between employer and employee. Independent contractors normally purchase their own supplies and equipment and take them from client to client.
The method for paying a person, the duration of his or her relationship with a small business, where an individual primarily performs work and whether the worker receives benefits are more things to consider should an employee classification dispute arise. Assess each employer and employee relationship on an individual basis to prevent misclassification.