Answer: I'm answering this question because my own situation acts as an excellent example of the differences between an employee and an independent contractor. It also exemplifies the fact that even in the clearest of circumstances, there will be factors that might point a different direction. Accordingly, one must always look at the relationship as a whole. [Q 2:12. References to "Q" are to numbered questions addressed in the third edition of Who's the Employer; they can be viewed online by subscribers.]
It's true I've been speaking for SunGard Corbel since the mid-'90s. I was very impressed with the quality of their conferences and with the professional way they treated me as a guest speaker. The relationship deepened two years ago when Corbel's Denver office asked me to teach some all-day seminars for them. (All references here to Corbel are to SunGard Corbel. I say this just in case anybody from the corporate office reads this article.)
There is no question in my mind that when I started teaching these seminars for Corbel I was acting as an independent contractor. Here are some of the factors involved:
In September, Corbel and I began discussions about my coming on to Corbel's payroll as an employee. We quickly came to an agreement and I came on board effective November 1, 2002. I was teaching seminars at the time. I did a seminar October 31 as an independent contractor and the following day as an employee.
- I was paid a specific fee to teach a specific class. I was not paid for my preparation time or my travel time. Rather, I was paid to do a specific job and my ability to use my time in other productive pursuits was affected by how efficiently I was able to do that job. [Q 2:21.]
- I enjoyed a great of latitude in how I did things. Of course, I had to follow certain procedures, use the materials they provided, and complete some paperwork. But how I presented the material was up to me in large measure, and I tend to do so in my own style. [Q 2:14.] (Please do not ask other Corbel speakers to sing during their presentations.)
- There was no expectation on anyone's part that after a given round of seminars I would necessarily be hired to do another set. I was there to plug holes in their schedule, to teach seminars their own staff was unavailable to teach. If people didn't like my approach, Corbel surely would not have asked me again. If Corbel had rearranged its schedules so they did not need outside support, I would not be needed. [Q 2:28.]
- Moreover, I was free to accept or decline any assignment.
- Corbel reimbursed my direct expenses, such as airfare, hotel, and meals as part of our fee arrangement. However, there were many indirect expenses that I continued to bear. [Q 2:19.]
- Corbel was one client among many others of mine. My services were made available to the public, not only as an attorney, but also as a speaker and to some extent as an entertainer. [Q 2:20.]
- All paperwork was consistent with my status as an independent contractor. I was not covered under any Corbel employee benefit programs, no withholding was taken from my fees, etc. [Q 2:25.]
- But there were factors that pointed the other way, to employee status rather than independent contractor status. Most significant is that when I did a seminar, I had to be in the city and at the hotel involved at the time in question, as dictated by Corbel-- but that is more part of the nature of the service itself rather than an indication of employee status. The audit guidelines tend to disregard this as a factor. [Q 2:31.]
Whenever somebody's status as an employee or independent contractor changes, I always ask what facts have changed to justify the change in status. Frequently, I get an answer that nothing has changed-- the parties just decided to go with the other treatment. In a situation like that, almost always the worker is truly an employee both before and after the change, or (somewhat less frequently) the worker is truly an independent contractor both before and after the change. However, in my situation, there are significant facts to show a change of status from independent contractor to employee:
Here again, there are factors that point the other way. I still work for other clients. Moreover, I "telecommute" and continue to work from my home office near beautiful Santa Barbara, California rather than freezing in Denver or counting chads in Jacksonville. But overall, there is no question in my mind that I was an independent contractor until November 1, 2002, and since then I have been and am an employee.
- I am no longer paid by the job. I receive a regular paycheck twice a month whether I'm on the road speaking or sitting in my office writing outlines and answering technical questions from Corbel clients.
- Although I do not particularly receive any more instructions on my speaking (thank goodness!) I do operate under fairly narrow instructions for writing projects I do for Corbel. Frankly, I find myself chafing against the Procrustean bed of occasionally oxymoronic "corporate style" in writing. (Did I put enough big words in that sentence that I won't get in trouble from the Powers that Be? We'll see.) But, because I am an employee, I will follow instructions even while I may attempt to change them. [Q 2:14.]
- I participate in Corbel's generous package of employee benefits. [Q 2:26.] (Anybody out there looking for a good place to work? Corbel treats its employees right.)
- Although Corbel still reimburses my travel expenses, I now can charge them on a company credit card rather than using my own. Moreover, Corbel has begun to reimburse some of my other expenses, such as telephone calls.
- My services as a speaker are no longer available to outside for-profit companies, though Corbel allows me to speak for ASPA and similar professional organizations. (We did agree, however, that I'm still available for hire as a stand-up comic!)
- My arrangement with Corbel technically is part-time, so that in essence I work for them four days a week. Corbel graciously accomodated my request to have some time available so I can continue to manage PIX, my book, and to some extent my law practice. However, one day a week is not much time to devote to a law practice. So while I still accept requests for opinion letters and consulting on the areas of my expertise, I am much more selective in doing so, because I cannot let that area of my professional life conflict with my obligations to Corbel.
- We now have a signed employment agreement, specifying that I am an employee and agreeing that I will follow company policies and procedures. [Q 2:24.]
- I am available to Corbel for whatever projects they wish to assign to me. I answer phones for client questions on technical issues. I write outlines and newsletters. I discuss strategies for upcoming seminars. There is an ongoing relationship that is far different than the specific, project-oriented relationship that existed previously.
Happy New Year to all!