Independent Contractor Compliance Blog - by Collabrus™

A recent US Supreme Court ruling about text messaging provides some insight on how the Court sees a limited segment of employer-employee relationship.

The U.S. Supreme Court issued a ruling stating employers may conduct limited warrantless searches of electronic media. To read the decision you may go to:  http://www.supremecourt.gov/opinions/09pdf/08-1332.pdf

There were also some implied assumptions about the nature of employer-employee relationships.

The primary issue at stake in this decision was the employee’s (Fourth
Amendment) right of privacy and the need for employers to have clear and comprehensive electronic communications policies. However, there was also an underlying (unstated) principle recognized about the nature of an employer-employee relationship. For example:

Direction and Control

The Supreme Court off handily recognized that when employers provide equipment they have a right to control how it will be used and even how much it could be used. To exercise this right they must clearly communicate the policies for employer-owned/provided equipment, including establishing the nature of the communications that are made using, or that interface with, employer-provided equipment. This includes all electronic systems, such as email, voicemail, text messages, cell phones, and other (probably not yet invented) technology.

From an IC Compliance point of view I consider this requirement the smoking gun for direction and control. If you provide your consultant with pagers, cell phones, laptops, PCs, etc, and then have polices the consultant must adhere while using them to do the job, to you are directing and controlling how the consultant will work while using your equipment on the job. That’s evidence of direction and control.

Paying Expenses

The court also recognized that employees are paid for their expenses. The decision stated,”…the City and OPD (Ontario Police Department) had a legitimate interest in ensuring that employees were not being forced to pay out of their own pockets for work-related expenses…”

This statement implies paying the consultant’s expenses makes them look more like an employee…

I might be taking a little bit of creative license…

I might be guilty of stretching this a little further than the Supreme Court Justices intended for me to get out of their decision, but the principles I stretched to are still correct and I think they offer compliance professionals important clues on making defensible worker classification decisions.