Appeals Court Rules Against Independent Contractor

Patricia Murray, an insurance agent for Principal Financial Group, was held to be an independent contractor, not an employee, so her attempt to claim sex discrimination in violation of Title VII of the Civil Rights Act of 1964 failed.

In determining whether Murray was an independent contractor or an employee, the U.S. district court analyzed the test as three possible formulations under Title VII: a “common law agency” test, an “economic realities” test and a “common law hybrid” test. The San Francisco-based 9th Circuit Court of Appeals found “no functional difference between the three formulations” and that the “common law” test pronounced by the U.S. Supreme Court in Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318 (1992), would govern the test of employee status.

The “common law” test focuses on the “hiring party’s right to control the manner and means by which the product is accomplished” and focuses on factors such as “skill required, the source of the instrumentalities and tools, the location of the work, the duration of the relationship between the parties, whether the hiring party has the right to assign additional projects, the extent of the work, the payment method, the hired party’s role in hiring and paying assistants, whether the work is part of the hiring party’s regular business, whether the hiring party is in business, the provision of employee benefits, and the tax treatment of the hired party.”

For Murray, the 9th Circuit held that these factors “strongly favor” finding that Murray was an independent contractor. Murray v. Principal Financial Group Inc., 9th Cir., No. 09-16664 (7/27/10).

Impact: Employers are advised to carefully evaluate applicable legal standards to determine whether a particular worker is an independent contractor or employee.

Workforce Management, October 2010, p. 7 — Subscribe Now!

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.