To Be Or Not To Be

Just because an employer calls someone an independent contractor does not make him or her so. Because revenue-starved states have been increasingly focusing on independent contractor classification issues, challenges to the proper classification of service providers arise most commonly in the context of claims before an applicable state unemployment division.

The story is a familiar one: employer engages services of an independent contractor, subsequently terminates those services, and the independent contractor files a claim for unemployment insurance benefits. The employer responds to the unemployment insurance claim by stating that the individual is not entitled to benefits because he or she is an independent contractor. The state unemployment insurance division then commences in investigation into the claim and, oftentimes, commences a full audit into the employer's payments to all independent contractors. Like many states, the federal government has also