Things Aren’t Always as They Seem: Classifying Employees and Independent Contractors
By Charles A. “Chip” Gentry
One of the most common problems I’ve encountered over my 20-plus years defending the fenestration industry is when a manufacturer thinks they’re sending an independent contractor to the jobsite, when in reality, they’re sending an employee of the company. Your company may have had good and honest intentions, but an angry homeowner with litigious tendencies will almost certainly find an attorney who can perceive what may be carefully hidden: an unknown employee.
IT COULD HAPPEN LIKE THIS
Consider something like this as an example: “Small-Scale Glass Inc.” has been hired by homeowner “Mike Unuhwear” to manufacture a window wall for his new home renovation. Small-Scale plans to manufacture the products at the plant, and tells Mr. Unuhware they will put him in touch with a trusted installer in the area, “John Duitall.” Mr. Duitall owns a small construction company and Small-Scale considers him an independent contractor.
In order to install its products, Small-Scale required Mr. Duitall to complete a week-long installation training course. Since Mr. Duitall passed the training course with flying colors over ten years ago, he has continually installed Small-Scale products without a single hiccup. As one of Small-Scale’s most trusted independent installers, Mr. Duitall has earned some perks, including the reimbursement of his travel expenses and schedule flexibility, allowing him to negotiate the installation timing directly with the customer.
One morning, Mr. Duitall began in-stalling Small-Scale’s systems on the Unuhware project. He wore his favorite hat brandishing the Small-Scale company name and logo, and used his own tools to install the window wall according to the instructions. The next day, Mr. Duitall ran into some trouble installing the windows. Some of the rough openings were not plumb, level and square and some of the wrap-around flashing didn’t fit correctly. As required by Small-Scale, Mr. Duitall sent the company a status report notifying them of the problems. The following morning Mr. Duitall called his trusty mentor, “Mr. Sceneitall,” who personally came to the jobsite to assist him. Mr. Duitall has been working with Small-Scale long enough that he’s permitted to hire outside assistance of his choosing. The men completed the project, and Mr. Duitall agreed to pay Mr. Sceneitall a small sum upon his receipt of the completed project check he would receive from Small-Scale.
Sadly, Mr. Unuhwear’s windows ended up leaking due to the less-than-ideal installation. Small-Scale thinks they’re in the clear because Mr. Duitall is an independent contractor. Just because he has his own LLC does not automatically insulate Small-Scale from liability. There are numerous factors a court considers when determining if an individual is an independent con-tractor or an employee. While some of the factors tend to show Mr. Duitall is an independent contractor, a court will likely find more favor classifying him as an employee (see box in magazine version).
WHO’S AT FAULT?
When your company arranges for an outside worker, make sure to distance your bottom line from a potentially defective installation. Several employee-favored factors are unavoidable: manufacturers must provide installation instructions, training is ultimately a positive thing, and a continuing relationship with a dependable installer will surely lead to consistently better results.
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