Fact or Fiction? “Independent Contractor” Has the Same Meaning for All Government Agencies

Posted on Fri, Aug 19, 2011

Fiction: One government agency’s determination that an employee is an independent contractor for one purpose does not mean that a different government agency will reach the same conclusion.

From the Division of Labor Standards Enforcement:

“The state agencies most involved with the determination of independent contractor status are the Employment Development Department (EDD), which is concerned with employment-related taxes, and the Division of Labor Standards Enforcement (DLSE), which is concerned with whether the wage, hour and workers’ compensation insurance laws apply. There are other agencies, such as the Franchise Tax Board (FTB), Division of Workers’ Compensation (DWC), and the Contractors State Licensing Board (CSLB), that also have regulations or requirements concerning independent contractors.

Since different laws may be involved in a particular situation, such as a termination of employment, it is possible that the same individual may be considered an employee for purposes of one law and an independent contractor under another law. Because the potential liabilities and penalties are significant if an individual is treated as an independent contractor and later found to be an employee, each working relationship should be thoroughly researched and analyzed before it is established.”

Copyright: HR California/Cal Chamber of Commerce

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