What's Your Business?
What appears at first glance to be a rather simple and innocent question for most business owners to answer, carries with it such incredible importance. Obviously, the context in which this question is asked matters. When asked in the context of a worker classification investigation, your answer could make or break your chances of surviving the investigation unscathed.
The dominant tests regulatory agencies use across the country are 1.) the 20-factor common law test and 2.) the ABC test. In both tests, the law of integration carries significant weight in your business’ relationship with the workers.
In the common law test the law of integration is defined as follows:
INTEGRATION - Integration of the worker's services into the business operations generally shows that the worker is subject to direction and control. When the success or continuation of a business depends to an appreciable degree upon the performance of certain services, the workers who perform those services must necessarily be subject to a certain amount of control by the owner of the business. See United States v. Silk, 331 U.S. 704 (1947), 1947-2 C.B. 167.
The ABC Test addresses it this way:
Such service is either outside the usual course of the business for which such service is performed OR that such service is preformed outside of all places of business of the enterprise for which such service is performed.
Essentially, what these rules allow regulatory agencies to do is reclassify your workers from contractors to employees if they determine that the services provided by the workers are consistent with the services provided by the business. So, if your business is a delivery company, any delivery drivers, by statute, should be classified as employees and afforded all benefits employees are granted in your respective State.
It is important to define your business accurately in all contexts. Commonly, auditors will look at a number of things including, but not limited to, the following:
- Tax Returns
- Secretary of State Filing
- Social Media – including owners/officers’ personal LinkedIn pages
- Your Website and Print Materials
If you operate in the delivery space and have a relationship with independent contractor delivery drivers, your business should be something other than a delivery or courier service.
To discuss further or if you have any other questions related to independent contractor compliance, please contact DDI today at 949-398-0489 or firstname.lastname@example.org.