Independent Contractor Compliance Blog

The recent Federal Ninth Circuit Court ruling holding the Americans with Disabilities Act and the Rehabilitation Act apply to independent contractors could just be the tip of a huge IC compliance iceberg.

Several synopses of the federal appeals court decision granting an independent contractor the right to sue a client company for discrimination reflect a deeper issue. Most refer to the client company being sued as “the employer.” One even states, “The U.S. 9th Circuit Court of Appeals recently overturned an earlier court decision when it ruled in favor of a contractor’s right to sue the Yuma Regional Medical Center in Yuma, Ariz., after being turned down for a job there“ (emphasis added).

Independent contractor and employee are mutually exclusive events

Employees apply for jobs. Independent contractors bid for jobs or contracts. A client company engaging an independent contractor is not an employer of that individual. 

Could it be the court believed this “contractor” was a misclassified employee and wanted to make a “fair’ decision?

I know I’m speculating here, but just go with me for a paragraph or two. 

Could it be that the court saw a person applying for a job like any other would-be employee and being discriminated against based on disability; however, the job never got off the ground, so they couldn’t rule on the worker’s classification before deciding if he could sue for discrimination. So maybe this was an end run by the court? (Isn’t speculation fun?)

If there is any truth to my speculation, why would the court stretch so far? 

There has been a government trend for several years to toughen up IC enforcement. I’ve reported before that IC’s are disliked by those who regulate the business world. In general, most government bureaucrats don’t like the free, uncontrolled nature of an IC in the business world.  Independent contractors are more difficult to tax and taxes are what sustain the government, including the court system. I think most of these bureaucrats believe businesses skirt the law, avoid taxes and cut costs by classifying employees as IC’s.

It’s not just the bureaucrats.

There are numerous examples of bills being introduced at both state and federal levels to make it more difficult to misclassify workers as IC’s. If you are interested in the details I recommend you search through my prior blog postings where I’ve reported on many of them in the past.

I’m not the only person to see this trend. 

As far back as 2006, the Washington Legal Foundation saw this current push to limit the use of IC’s. In their publication The Legal Backgrounder, Vol. 21 No. 19, June 2, 2006, they reported, “The “independent contractor” model of conducting business affairs is coming under increasing assault from government regulators, labor activists, and plaintiff’s attorneys…” 

The world is changing.

In my opinion the belief that businesses skirt the law by classifying individuals as independent contractors motivates bureaucrats, lawmakers and courts to make it tougher to engage an individual as an independent contractor. Many believe most IC’s are just employees being taken advantage of by “employers.” Because of this belief courts are becoming more likely to allow an IC the same legal standing as an employee to “level the playing field” and make it “fair.” This latest ruling seems to do just that.

It is so important to protect your company in this changing world.

Businesses can no longer operate with the “let’s shoot from the hip on classification issues until we’re challenged then deal with it” policy. It is too expensive and they are too likely to be wrong.  Smart business people make sure they properly classifying ICs and can prove it when challenged. As the challenges become tougher, the preparation and proof must be stronger.