Gary, an estate planner, works on a contract basis for our clients at \"State of

Question

Gary, an estate planner, works on a contract basis for our clients at "State of Estates". On occasion, we contract Gary to handle a specific client for a specific estate planning job. Per our contract with Gary for these specific clients, he is paid commission on a weekly basis based on the overall fee received by the firm. When working for these specific clients, Gary is able to use our office space, equipment, and any supplies necessary to complete the job. To ensure consistent work product and regulatory compliance, Gary submits his work to a supervisor, who approves it and send it to the client on behalf of our firm. Recently, we had to lay Gary off in the middle of a job and he filed for unemployment compensation.

What legal tests could be employed to determine whether Gary is an independent contractor or employee?

Based on these tests, what is your conclusion as to Gary's status: independent contractor or employee?

Explanation / Answer

Answer:

1.Legal tests that could be employed to determine whether Gary is an independent contractor or employee:

-Common law agency test:

This test is used to determine how much control an employer exerts over an particular individual.

This test also determines the employee work status for the purpose of federal employment taxes and income tax withholdings

-Economic Reality tests:

-This test is used to determine the level of financial dependence of a worker with the employer.If the individual depends more on the employer then the individual should be considered as an employee

-Multiple factor test:

This tests uses various factors like number of working hours,method of appoinment and termination,types of wages etc to determine whether the individual is an employee or not

-IRS 20 point test:

This test is used to determine the tax liability of the employers and individuals.This is also called as right to control test and is designed to evaluate who controls ad how work is performed.This test includes 20 factors to determine whether the individual is an employee or individual contractor.The factors include amount of training,control of assistants,continuity of relationship,flexibilty of schedule etc

2.conclusion:

Gary is an independent contractor based on these tests.Gary works on a contract basis and the contractor does have the full control over Gary and Gary does not depend fully on the employer for his financial needs.He justs works for a period of time with the employer.

Gary have the right to use the office space,equipment and other supplies only at the time of contract.So he is not an employee of the firm.His number of working hours is also limited and he is paid only on a weekly basis.Employees are paid monthly and not on weekly basis.

So based on all these tests ,the employer doesnot have a long term relationship with Gary and have relation only at the time of contract.So Gary is not an employee and he is an individual contractor to the firm.

During the time of contract,if Gary is laid off then the employer has breached the contract and has to pay compensation to Gary.Once the contract ends then Gary cannot file a complaint against the firm for unemployment compensation

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