Proving a Worker Is Not an Employee

Question

I have a new, very small Internet business that I started last year from my home. I have no employees, but I hired a friend to answer e-mail on her computer, from her home, in her spare time and paid her a flat $100 each week that she did some work for me--a total of $2,300. She applied for unemployment insurance recently and used me as one of her employers. The New York Department of Labor now wants big money from me, claiming she was an employee. How do I convince them that she falls under the legal term independent contractor and that I don't owe anything?

Answer 1

Like a number of other state agencies, the New York Department of Labor uses something called the common law test to determine whether a worker is an employee or independent contractor for unemployment compensation purposes. Under this test, a worker is an employee if the person for whom he or she works has the right to direct and control how the work is done, both as to final results and as to the details of when, where and how the work is to be performed.

The Labor Department will examine a number of things to determine if you had the right to control the worker -- for example, whether you provided tools and equipment, gave the worker instructions, set the worker's working hours. The more that you can show that this friend of yours worked on her own and gave herself her own marching orders, the better your chances of success.

Since you seem wrapped around this axle, you might need more specific help. Nolo does publish a book that can provide you with more detailed information. It is called Hiring Independent Contractors.