Does Your Company Use Sub-Contractors?

September 23, 2015

MP900308928Why Your Risk Just Went Up

The National Labor Relations Board (NLRB) unveiled a new standard for determining which employees are considered employees and which are considered contractors. Over that past few months, most government regulators have been cracking down on businesses that misclassify employees as contractors. These rules may make more businesses responsible for labor law violations committed by contractors and staffing agencies in wage and hour benefits.

Previously, employers were responsible only if they had direct control over working conditions. This ruling will impact temporary staffing firms which currently employ over 3 million people. In some cases, these “contractors” may be deemed joint employees.

Most State governments are cracking down on businesses that try to skirt the employee/employer relationship by identifying certain individuals as contractors. Here is a good test:

The six factors, or questions, in the “economic realities” test include:

  1. Is the work an integral part of the employer’s business?
  2. Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?
  3. How does the worker’s relative investment compare to the employer’s investment?
  4. Does the work performed require special skill and initiative?
  5. Is the relationship between the worker and the employer permanent or indefinite?
  6. What is the nature and degree of the employer’s control?

Safe Harbor Insurance knows business in our communities – you can find our offices in Friday Harbor, and our clients all around WA. As an independent insurance agency, we take pride in reviewing your options with multiple insurance companies and comparing protection and prices to find the best value for your business.