The two main tests to determine the status of independent contractors are the common «right to test» law and the «economic reality test,» which applies under the Fair Labor Standards Act (FLSA). As explained in more detail below, these two tests (and their variations) reflect different approaches to assessing a common fundamental question: does the company have the right to control how and how the worker provides the desired services? The greater a company`s control over the methods and means used by a service provider to conclude a project, the greater the risk that a court or agency will recognize the service provider as an employee. In addition to developing the agreement based on existing testing, the parties must also be confident that the relationship complies with these requirements in practice. For example, the author of this question should ask whether the company is able to meet the requirements of the agreement, such as the limited follow-up of the procedure. B, invoiced payments, etc. A review tribunal or agency will go beyond the terms of the agreement and review the relationship as it exists in practice. The courts decide, taking into account several factors, whether a worker is a salaried worker or an independent contractor; However, the main consideration is the nature of the relationship and the level of behavioural and financial control that the employer has invoked with respect to the worker. First, the agreement should specify that the company used the service provider and that the provider agreed to be recruited as an independent contractor. Opening paragraphs or clauses may also emphasize that the organization hires the independent contractor because of its particular or unique skills, for a specific task, for a limited time and for limited purposes. These introductory clauses often include the supplier`s statements that they have these skills, equipment and training.
If you are an entrepreneur and need skilled labour or if you have a short-term project, you are likely to be speaking to independent contractors. Cooperation with independent contractors has many advantages, but there are legal risks. The best practice is to get good legal advice to ensure that you do not violate federal, national or local labour laws. In addition, an experienced lawyer can develop an independent contracting agreement to help you avoid litigation, enforce your rights and prove that you have complied with labour laws.