The SCORE 2015 Issue 4 | Page 33

5. Whether the relationship is permanent or indefinite; and 6. The nature and degree of control exercised by the employer. As the Administrator notes, none of these single factors is controlling, and they merely serve as a guide to help enforcement agencies and courts recognize when a worker is an employee. That said, in practice, the first, second and sixth factors are generally the most important considerations. So how are these three factors applied? Integral part of your business: If the work performed is integral to the business, the worker is more likely to be economically dependent on the employer. For example, in a restaurant, a cook is integral to the business and more likely to be an employee, as compared to the individual who repairs or updates the POS system. Opportunity for profit or loss: If a worker’s managerial skill can affect his/her opportunity for profit or loss, this points to a worker being in an independent trade or business. Here, the question is not whether choosing to work more hours means more revenue, which is true for both employees and independent contractors, but whether there are opportunities to make decisions that could result in a loss or different profit margin. Nature and degree of control over the worker: In order to be an independent contractor, the worker must actually control meaningful aspects of the work so that it is reasonable to view the worker as being independent. That the worker can determine the number of hours worked and might not be subject to close supervision, is not determinative as that can also be true for a trusted part-time employee. Again, while these factors tend to be more important than the other factors, whether a worker is deemed an employee or an independent contractor will be based on the totality of the relationship. Even if there is a significant degree of control over the worker, if the work is not integral to the business, the worker has an opportunity for loss, there is a proportionate investment by the worker and the work requires special skills, the worker is likely an independent contractor. So what does this all mean? As a franchisee, you are considered, for enforcement purposes, as an employer of“low-wage workers.”As such, you are more likely to be selected for investigation and must be especially diligent in your efforts to properly classify employees and independent contractors with whom your franchise has a relationship. In his July 2015 interview, the Administrator stated that the Interpretation is directed toward businesses like yours as a warning: If your business relies upon independent contractors to support its business endeavors — even when those relationships are “advantageous for workers and businesses”— you should not be surprised