Are My Independent Contractors Really Employees?

A: Be careful with your independent contractor classifications. The Washington Supreme Court recently adopted an “economic dependency” test, which means that if an individual is economically dependent on the company, he or she is considered an employee under the state minimum wage law. If these individuals work exclusively for you and perform work that is similar to what your employees are performing, they are likely employees for wage and hour purposes.

To further complicate matters, a Washington Court of Appeals recently ruled that if the independent contractor was providing “personal labor,” then the employer was subject to workers compensation premiums on the individual, regardless of their contractor status. It seems likely that the individuals who are working for you are actually employees, for purposes of both wage and hour law as well as workers’ compensation coverage. And even if you have other individuals working for you who are true independent contractors under wage and hour law, it is possible that you might still have to carry workers’ comp coverage for them. These analyses are highly fact-specific, and state laws differ, so you should seek advice from your Vigilant staff representative.