There is a recent trend of businesses classifying workers as “independent contractors” in an effort to avoid purchasing workers comp insurance for their employees. However, an independent contractor is not determined by the title the business gives them, but rather a distinct set of standards set by your state laws. Before you choose to call an employee an independent contractor and forgo purchasing workers comp insurance, you should confirm that they are actually an independent contractor under Oklahoma law.
Oklahoma Case Law
The Oklahoma Supreme Court has determined that an independent contractor is someone who performs work for another individual free from control and direction from his employer in all matters connected with the performance of the services, except as to the result of the product or the work. Page v. Hardy, 334 P.2d 782 (1959). Additionally, this case goes on to explain that determining if someone is an independent contractor should be done on a case-by-case basis, and there is not a bright-line rule for who is an independent contractor and who is an employee.
The Oklahoma Supreme Court provided a multi-factor test to determine if someone is an independent contractor. These factors include:
The nature of the contract between the parties, whether written or oral.
The degree of control which, by the agreement, the employer may exercise on the details of the work, or the independence enjoyed by the contractor or agent.
Whether or not the one employed is engaged in a distinct occupation or business and whether he carries on such occupation or business for others
The kind of occupation with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.
The skill required in the particular occupation.
Whether the employer or the workman supplies the instrumentalities, tools and the place of work for the person doing the work.
The length of time for which the person is employed.
The method of payment, whether by the time or by the job.
Whether or not the work is a part of the regular business of the employer.
Whether or not the parties believe they are creating the relationship of master and servant.
The right of either to terminate the relationship without liability.
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What This Means
While the case law doesn’t provide a perfect answer about whether or not your employee is an independent contractor, there is a good rule for determining if they are. If you are the person’s only employer, they are most likely not an independent contractor. Additionally, if you analyze anything other than the end result of their work (such as how it is completed or when it is completed) they are most likely not an independent contractor. If you have questions about whether or not you need insurance for your employee, give us a call, and one of our experts will go over your policy and your unique business needs.