Classification of employee

Employees may not have their own businesses and the relationship between the employee and employer may be beyond business. An employee receives instructions from the company on how to work, where and when. The employer has the right to do so because the employee is there to serve the interests of the firm. The instructions given to the employee may be orally or in terms of written work when on the other hand an independent contractor is not given detailed instructions on what to do because he/she is an expert in the field. An employee receives training from a company in order to be employed this is because the services needed from the employee should be done in a specific manner that the company wants which is different from an independent contractor whereby he/she does not require any instructions or training from anyone as he/ she is an expert in his field.

An employee has no power over hiring new staff, supervising and payment of junior staff which is a sign of employees being controlled. When it comes to independent contractors, they have the power to hire workers in accordance with the demands of the job and the laws of the land, pay other workers who are in a contract with them that he/she has agreed to provide with services. As employees have a continued relationship with the client with whom the services are offered to, service delivery may continue despite it being offered in irregular basis as it may be offered on a part-time basis, seasonal or over a short period. An employee conducts his/her service delivery at employers premises even where work can be done elsewhere which is a sign of control.

Being at the employer's premises physically means direct control over the employee. It was adversely developed within the case law of vicarious liability in the law of tort. The driving force in this is to determine whether a worker is an employee or an independent contractor. A person is an independent contractor if his undertakings are not integrated into the company's business but it is only an accessory to it. This type of test is hardly used nowadays and it is not well understood. It does not hold when it encourages the large and diffuse organization that does not profit making in this modern economy. They also provide support when a contract is spotted and happens to be a contract for service.

However, there has been an increasing number of relationships that this formula cannot quantify. Penalties for misclassifying workers Misclassification of employees into independent contractors poses a great danger to any organization as it affects taxation and at the same time standard of employment. The addition of new Californian law adds another significant consequence of determining the relationship between an employer and a worker. There is a new California law known as the California labor code section that adds another significant consequence on misclassification of workers into independent contractors and determines the relationship between worker and the employee. 8 comprises fines worth of $5000 to $15000 for each violation and other fines that may be determined by the court of law. If the employer is found to have engaged in breaking this law he/ she will have to pay a fine of $10000 to $ 25000 per violation.