Employee v. Independent Contractor Anthony Thoms was hired by Jonathan Quick of
ID: 424972 • Letter: E
Question
Employee v. Independent Contractor
Anthony Thoms was hired by Jonathan Quick of Sun Vacations, Inc., to create a computer program for Sun Island to use in maintaining records of its cash receipts, inventory, sales, figures, and other data. No agreement was reached as to ownership rights in the program that Thoms developed, called CRISOD. Thoms did most of his programming at the Sun Vacations office. Although Quick gave Thoms frequent instructions as to what he wanted from the program, Thoms generally worked alone and enjoyed considerable autonomy in his work. He worked fairly regular hours, but he was not always paid by the hour occasionally, he submitted bills (invoices) to Sun Vacations for his work. Thoms never received any employee benefits, such as health insurance, and Sun Vacations never withheld federal and state taxes from Thoms paycheck; nor did it pay any Social Security taxes on Thoms' earnings. When Quick unilaterally cut Thoms hours in violation of an alleged oral agreement, Thoms left Sun Vacations and demanded compensation for Sun Vacations' use of CRISOD. Quick refused to pay Thoms for the programs use and also stated that he would not pay Thoms $14,560 in back wages unless Thoms signed a form releasing all rights in CRISOD. Thoms then sued Quick and Sun Vacations for copyright infringement, and the court had to decide who owned the copyright in the program. Do not discuss copyright law. Answer the question of Thoms status and rights at Sun Vacations
Explanation / Answer
In order to decide on the status of any worker being an employee or an independent contractor, the underlying federal rules defining clearly the status and method of differentiation between the two needs to be applied. It is mandatory for purposes of Federal employment tax payments that every business examine and ratified the relationship between it and the worker.
Given that an organisation is required to with hold part of workers salary for purposes of income tax and also pay social security, Medicare taxes and unemployment tax on wages paid to employees only. In the case of an independent contractor no deductions are to be made by the employer as they are taxed under the self employment tax. An important rule to decide the status of a worker is on the basis of the control of the payer over the work and worker. Is the fare has the right do only control the result of the work but not the work to be done the methodology applied for doing the work, and the place where the work will be done. The status can be made clear by application of three categories of Rules.
The level of behavioural control over the worker. Evaluate the type of instructions given regarding the work such as when, where, what methods to apply and from where and how to receive supplies and inputs. High level of clear instructions indicate status of employee, low independent contractor. The degree of instruction provided, again high level means statuses of an employee and low level more likely an independent contractor. Existence of a system of evaluation of performance to measure detailed work methods and applications constantly through monitoring represent an employee whereas, in case of evaluation of the end result only, it is likely to be an independent contractor. When training is offered to the worker on how to do the job especially when it is periodic ongoing process and regarding procedures and methods followed within an organisation it is a strong indication of the work of being an employee because independent contractors are already trained utilise their own methods for executing the work.
The financial control over the workers job with another aspect which provides clarity on status of a worker. The level of investment in the equipment used by a worker, mostly presence of investment indicates an employee. Opportunity for profit or loss signifies the status of an independent contractor as also unreimbursed expenses which is a situation that does not arise with employees, as all expenses and requirements are centralised. An independent contractor is free to work at multiple jobs and seek employment opportunities even while working under one contract where as this option is not available to employees. An employee receives a guaranteed regular wage amount as decided at the time of appointment, where as independent contractors are paid a fixed sum of money in the form of fees.
The status also depends on the type of relationship with exists between the worker and the business and the perception of each other. Written contracts may be available to explain and describe the relationship this can not be considered sufficient evidence at all times. Benefits one of the major deciding factors on the status of a worker as a business providing employee type benefit switches insurance, pension plan, sick pay, vacation pay, are key indicators of the status of the worker as an employee as none of these benefits extended to independent contractors. The permanency of the relationship is also a major indicator as employees work on the perception of continuity for an indefinite period rather than a fixed time decided by a specific project or period related to specific job to be completed. Kind of services provided towards the regular activity of the business, the service which is being performed by the worker should be a part of the regular activities understand by the business rather than one time activity required for development or growth of the business, or enhancement in other ways. Most employees performed regular routine tasks which are an everyday requirement for business.
On the basis of all the above facts it is very clear that status of Anthony Thoms, is open independent contractor with regard to his work at Sun vacations. Therefore, Anthony Thoms have absolute copyright over all work created for Sun vacations. On the basis of every rule, Thoms had the status of an independent contractor within the organization.
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