Understanding Georgia’s Test for Who Is an Independent Contractor

The question of whether a worker should be classified as an employee or an independent contractor often arises in employment law disputes. The answer matters because independent contractors get treated different from full-time employees under wage and hour, tax and unemployment laws.

Last year, Georgia enacted a law adopting a multi-factor test for determining whether a person can be treated as an independent contractor for purposes of unemployment compensation. If the worker qualifies as independent under the test, then the hiring business does not have to pay into the state unemployment insurance fund for that person.

Before passage of the recent law, courts deciding the employee vs. independent contractor issue focused on the level of control the business had over the worker. If the business controlled how and when the person did their job and provided the necessary equipment, then the person was arguably an employee and not independent.

Today, rather than relying purely on control, courts look at the following seven factors when determining whether a person is independent or not:

1. Ability to work for other companies or hold other employment at the same time
2. Freedom to accept or reject work assignments
3. No minimum hours to work or no minimum sales quotas to hit
4. Freedom to set his or her own work schedule
5. Receipt of only minimal instructions and no direct oversight or supervision regarding services to be performed, such as the location where the services are to be performed and any requested deadlines
6. No territorial or geographic restrictions
7. No requirement to perform, behave or act in a manner related to the performance of services for wages

With the law being less than a year old, it is still unclear whether a person must meet all seven factors to be considered an independent contractor. That is something the courts will sort out as cases get decided over time.

A company that misclassifies an employee as an independent contractor, and therefore fails to contribute to unemployment for that individual, can be fined. The fine is up to $2,500 if the business has less than 100 employees and up to $7,500 if more than 100 employees.

The Reddy Law Firm in Suwanee, Georgia handles all issues related to employment relations in Gwinnett County and neighboring areas. If you believe your employer is misclassifying you as an independent contractor to deny you benefits, please call 678-905-5475 or contact us online to schedule a free consultation.