Employerand Employee Relationship

Employer/Employee Relationship

Many of the problems employers have in regard to worker classification arise when determining whether a worker is an employee or an independent contractor. It may be cheaper to use independent in a business than employees because the taxing and reporting requirements are much less costly than they are for employees. It is incumbent for the Little Lamb Company to determine whether or not an employee-employer relationship exists or whether Mary should be paid as a contractor.

Independent Contractor or Employee

Under the common law test, if the employer has the right to control what work will be done and how that work will be done, then an employer-employee relationship exists and the worker is a common law employee. This is true regardless of whether the employer actually exercises the right on a regular basis. However, if an individual is subject to the control or direction of another only as to the results to be accomplished, and not as to the details by which those results are accomplished, the individual would not be an employee under the common law test. It makes no difference what the worker is called by the employer. A contractor is still an employee if the employer controls the work that is to be done. (Employee vs. Independent Contractor, 2005)

Changing Relationship

Under contract, Mary started with the Little Lamb Company as an additional programmer for a special project. Nearing the end of that project, Mary was asked to continue with a new project that had arisen. At first, the services rendered by Mary could have been viewed as part of a separate business, thus identifying Mary as an independent contractor. She worked independently to achieve specified results. There is no employer-employee relationship between an independent contractor and the person or company that purchases his/her services. The independent contractor controls the means by which the work is performed, while the purchaser of the services retains control over the result of the work.

As Mary began work on her new project, the supervisor began working more closely with her and required the use of company materials and equipment, and required Mary to adhere to company work schedules. When Little Lamb Company began to direct and control Mary, Mary became an employee. The fact that the business furnished significant tools, materials, and other equipment tends to show the existence of an employer-employee relationship. Instructing Mary to comply with the business' instructions about when, where, and how to work also indicates control.

There are three main areas when determining whether the worker is an employee or an independent contractor: (Employee vs. Independent Contractor, 2005,p.1).

* Behavioral Control - a worker's freedom of judgment and movement.

* Financial Control - a worker's financial independence and risk.

* Relationship of the Parties - a worker's day-to-day responsibilities to the business.

The nature of the relationship between Mary and the Little Lamb Company is the true determinant. If the employer has the right to control only the result of the person's work, the general rule is that the worker is an independent contractor (p.1). Clearly, Mary's relationship has changed with the Little Lamb Company over the course of time.

Violations to Employment-at-Will

After two years, economic conditions forced the Little Lamb Company to make budget cuts. Mary was asked to leave. Thirty days later, a major contract was acquired by the company, which reinstated the need for Mary's services as a programmer. However, the choice was made to hire an equally qualified relative of the supervisor instead of offering Mary an opportunity to return.

The Employment At-Will Doctrine means that employment is presumed to be voluntary and indefinite for both employees and employers. As an at-will employee under the doctrine, you may quit your job whenever and for whatever reason you want, usually without consequence. In turn, at-will employers may terminate you whenever and for whatever reason they want, usually without consequence. Either party may end the relationship without prior notice, but neither party may breach contracts (Employment at Will, 2005, p.1).

Good Faith and Fair Dealing

When an employee