Employee vs. Contractor

Form I-9, Employees, and Independent ContractorsAs the government is on the verge of converting the 2-page Form I-9 to 19 pages, it will be turning what is already complex into something which has the potential to be even more of a challenge for employers to complete. All employers must complete Forms I-9 for their employees. Independent contractors are exempt from this requirement. The use of the different labels just to avoid completing Forms I-9 however is not to be taken lightly. To shed some light into this often faced situation, one should consider a recent ruling by the United States Department of Justice Executive Office for Immigration Review, Office of the Chief Administrative Hear Officer ("OCAHO") for a case where the definitions of "independent contractor" and "employee" were disputed by the two parties involved. The U.S. Department of Homeland Security, Immigration and Customs Enforcement ("ICE") filed a complaint against Mr. Saidabror Siddikov d/b/a Beyond Cleaning Services. In their complaint, ICE alleged that Mr. Siddikov had failed to complete I-9 forms for six of his workers and sought $6600 in penalties, but Mr. Siddikov maintained that each worker was an independent contractor and did not need to complete an I-9. In its motion, the government argued that a worker cannot be classified as an employee or independent contractor based on an arbitrary decision made by the employer. Instead, ICE asserted that the "right of control" was the most important factor in determining an individual's status. Citing Breaux and Daigle, Inc. v. United States, No. CIV. 88-1535, 1989 WL 119058 (E.D. La. May 17, 1989), a case in which unskilled crab pickers were deemed to be employees, ICE claimed that Beyond Cleaning Services controlled the work of the six individuals, "as it identifies customers, it has the customers provide all the tools for the job, the customers set the hours exclusively, and the workers are paid by the hour rather than by the job." Due to this perceived level of control, the government argued that Mr. Siddikov had failed to prepare, retain, or present I-9 forms for these six employees. In his answer denying the allegations, Mr.Siddikov used the Internal Revenue Service's criteria for assigning status as an employee or independent contractor for each of the six individuals. He argued that while he assigned the workers to specific jobs, he did not provide direction on the equipment, number of workers, where necessary supplies could be purchased, or what tasks each individual needed to complete. Also, he claimed that he did not have ongoing relationships with four of the six employees, two of the employees ran their own companies, and that he never evaluated the work of any of the individuals. Mr. Siddikov provided detailed descriptions of his work relationships with each individual and described their work outside of the scope of their involvement with Beyond Cleaning Services. OCAHO recognized that this case required the employment of the following three levels of analysis: regulations, OCAHO past decisions, and principles of agency law discussed in federal cases.These six workers were not supervised or controlled by Beyond Cleaning Services as the regulatory definition of employee would require, common law factors agreed with the Respondent, and none of these workers were economically dependent on Beyond Cleaning Services. After examining the, "totality of the circumstances", Administrative Law Judge Ellen K. Thomas acknowledged that although many contemporary workers fall into a gray area between employers and independent contractors, Beyond Cleaning Services properly classified the six individuals as independent contractors. The above information has been provided to you for educational purposes only. Please feel free to contact the Clark Lau LLC team to assess your particular circumstances. We assist employers in remaining compliant with hiring and immigration requirements. Special thanks to Clark Lau team member Lucas Sutherland for contributing to this post.