Page 3 - White Paper-Independent Contractor Laws

• the service is performed outside the usual course of the business of the

employer; AND

• the individual is customarily engaged in an independently established trade,

occupation, profession or business of the same nature as that involved in the

service performed.

It is important to understand that all three of these tests must be met. It is

the second prong that has proven most troublesome for employers. Even if a

person functions independently, and “freelances” for other companies in addition

to providing services for the business, if what that person does is part of the

ordinary operations of the business, the employer could be breaking the law by

classifying that person as an independent contractor. For example, if I hire

someone to paint my office, or plow the parking lot, those activities are not part of

the usual course of my business as a law firm. If, however, I hire someone for 10

hours a week to do legal research, even on a temporary basis, that person is

performing a core function of my business, and likely should be paid as a W-2

employee, no matter how few hours he or she works, or how temporary the

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