The common law test is based on a very simple notion: Employers have the right to tell their employees what to do. The employer may not always exercise this right—for example, if an employee is experienced and well trained, the employer may not feel the need to closely supervise him or her—but the employer has the right to do so anyway.
Under the common law test, workers are employees if the people for whom they work have the right to direct and control them in the way they do their jobs—both as to the final results and as to the details of when, where and how the work is performed.
EXAMPLE: Mary takes a job as a hamburger cook at the local AcmeBurger. AcmeBurger personnel carefully train her in how to make an AcmeBurger hamburger, including the type and amount of ingredients to use, the temperature at which the hamburger should be cooked and so forth. Once Mary starts work, Acme-Burger managers closely supervise how she does her job.
Virtually every aspect of Mary’s behavior on the job is under AcmeBurger control—including what time she arrives at and leaves work, when she takes her lunch break, what she wears and the sequence of the tasks she must perform. If Mary proves to be an able and conscientious worker, her supervisors may not look over her shoulder very often, but they have the right to do so at any time. Mary is AcmeBurger’s employee.
In contrast, when you hire an IC, you hire an independent businessperson. A hiring firm normally does not have the right to control the way an independent businessperson—an IC—performs agreed-upon services. Its control is limited to accepting or rejecting the final results.
EXAMPLE: AcmeBurger develops a serious plumbing problem. AcmeBurger does not have any plumbers on its staff, so it hires Plumbing by Jake, an independent plumbing repair business owned by Jake. Jake looks at the problem and gives an estimate of how much it will cost to fix. The manager agrees and Jake and his assistant commence work. The manager doesn’t give Jake any instructions on how to fix the plumbing problem—the manager just wants the problems resolved
In a relationship of this kind where Jake is clearly running his own business, it’s virtually certain that AcmeBurger does not have the right to control the way Jake performs his plumbing services. Its control is limited to accepting or rejecting the final result. If AcmeBurger doesn’t like the work Jake has done, it can refuse to pay him.