Independent Contractor Classifications — Basic Primer (or Reminder)

As we have reported in the past, federal and state governmental agencies have announced "crack downs" on independent contractor misclassifications, and employers found to be misclassifying employees as independent contractors face severe penalties and damages. There are various legal standards, and no one factor alone usually proves or disproves a proper independent contractor classification. Companies must evaluate federal and state laws to properly classify a worker as an independent contractor, and while legal guidance is strongly recommended, the examples below provide a basic primer on independent contractor classification.

  • Independent contractors are usually hired to perform a discrete project during a set period of time with a starting and ending date. A painting contractor, for example, is hired to complete one discrete project (i.e., to paint a specific room a specific color by a certain date). Unlike most employment relationships, independent contractors are not typically hired to continuously perform services for an indefinite period of time.
  • Independent contractors have significant freedom or "control" to determine what materials and equipment are used during the project as well as the methods and techniques used to achieve the final work product. To illustrate, a painting contractor is not typically instructed on the paint brushes to use, which wall to paint first, or the painting techniques or methods. Conversely, in many employment relationships, employees are required to adhere to company policies, protocols, procedures, methods, or manuals as to how to achieve the final work product.
  • Independent contractors usually supply their own materials, pay for many, if not all, of their own expenses, and are not typically trained by the company. Painting contactors, for example, supply the ladders and paint brushes to complete the project, pay for phone service, and do not typically charge for travel expenses to go to the paint store. Employees, on the other hand, are usually provided company materials or equipment to complete their job.
  • Independent contractors have freedom to work for other customers or employers during and after the project. Alternatively, employees usually work for one employer and may have restrictions on their employment opportunities with other companies during and after the employment relationship.
  • Independent contractors usually have a formal, written agreement in place describing the independent contractor relationship, setting a price/fee for the final product and the terms of the project. Alternatively, employees oftentimes are employed "at will" and are governed by company policies and procedures setting forth the terms and conditions of employment.

Do Employers Need to Accommodate an Employee Who's Using Medical Marijuana?

A state agency in Oregon sued an employer after an employee was terminated for telling his supervisor he had a registration card under the state's Medical Marijuana Act and used marijuana for a medical problem. While the employee used medical marijuana one to three times per day, he never used medical marijuana at work. Additionally, the employer considered the employee's work to be satisfactory and was considering the employee for a full-time position prior to his termination.

In this recent case (Emerald Steel Fabricators v. Bureau of Labor & Indus.), the Oregon Supreme Court ruled that employers in Oregon are not required to accommodate employees who are using medical marijuana pursuant to the Oregon Medical Marijuana Act.

The Court emphasized that the Oregon Medical Marijuana Act specifically provides that "the protections of [the Act] do not apply to any . . . employee who is currently engaging in illegal use of drugs if the employer takes action based on that conduct." While the employee's use of medical marijuana did not violate state law, such use did violate the federal Controlled Substances Act. Since the employer discharged the employee for currently engaging in illegal use of drugs, the employer was under no duty to accommodate the employee's marijuana use, despite its connection to a potential disability.

Currently, 14 states have legalized medical marijuana (Alaska, California, Colorado, Hawaii, Maine, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington). As more and more states pass medical marijuana laws, employers need to be aware of the potential ramifications on their drug-testing policies. While employers in Oregon are not required to accommodate medical marijuana use even outside the workplace, this may not be the case in other states. Employers should carefully review the specific language contained in any state medical marijuana laws and other court rulings to confirm their obligations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.