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Preserving Independent Contractor Relationships During the COVID-19 Outbreak

By Michael E. Brewer & Stephanie Priel on March 25, 2020
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Layoffs, reduced schedules, sick leave, and telecommuting—these are just a few of the issues that employers are navigating as they quickly adapt to the effects of the global pandemic. While moving full speed seems to be the only way to keep up with the rapidly-evolving landscape, companies should take a moment to ensure that they do not unintentionally convert their independent contractor relationships into employment relationships.

As a reminder, a degree of separation between companies and contractors must be maintained to preserve the independent contractor relationship. To determine whether a worker is misclassified as a contractor, the IRS and courts in many states review a multitude of factors, including the level of control exercised by a company; courts in other states (including California, as discussed in this blog post require companies to satisfy a stringent, three-part test to prove that the worker is properly classified as a contractor. Under any standard, an accidental misstep during the Coronavirus crisis could have the unintended consequence of converting a contractor into an employee.

For example, to address the myriad employment issues, companies have been distributing company-wide alerts, such as: employee travel letters for the “Critical Infrastructure Workforce” to carry as they travel in the field and commute to/from work; information and notices regarding Families First Coronavirus Response Act (FFCRA); WARN Act notices; unemployment insurance benefit forms; and the like.

Companies should be mindful to distinguish between contractors and employees when sending out these notices—companies should send notices to contractors couched in language reflective of the independent contractor relationship and applicable independent contractor agreements, and other notices should not be distributed to the contractor workforce at all (e.g., WARN Act notices, unemployment forms, etc.).

During times like this, when it seems like each day presents a new employment-related hurdle, companies should take extra care to ensure that they are properly communicating with their independent contractors.

 

Photo of Michael E. Brewer Michael E. Brewer
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Photo of Stephanie Priel Stephanie Priel
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  • Posted in:
    Employment & Labor
  • Blog:
    The Employer Report
  • Organization:
    Baker McKenzie
  • Article: View Original Source

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