Introduction
The case is about Gary, an estate planner who works on a contract basis for the State of Estates. The organization contracts Gary to handle estate planning jobs for specific clients for which he is paid a commission weekly. Gary is allowed to use the organization’s equipment, office space, and any other supplies that are needed to complete the job effectively. The organization also requires Gary to send the work to a supervisor, who then sends it to the client upon approval. This paper will use relevant labor laws to identify the legal tests that may indicate whether Gary deserves to get unemployment compensation.
Legal Tests
According to the Fair Labor Standards Act 2021 86 FR 1168 there are two legal tests that hold weight. They are the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss. Economic dependence means whether workers are dependent on another person’s business for the opportunity to provide service or are in the business for themselves. Thus, an employee is dependent on a potential employer for work and is only able to work under the permission of the potential employer. On the other hand, an independent contractor is in business for him/herself and does not need the permission of others (Posner, 2021). Based on these tests, Gary qualifies to be an employee because the organization had control over the work he performed through the supervisor. Also, the organization provided Gary with all the tools needed to complete the tasks, which adds another layer of control.
Applicable Laws for Protecting Employee and Independent Contractors
The FSLA provides regulations that touch on who is an employee and their rights. The laws touch on wages, nature, degree of work, provision of materials, and the relationship between employees and employers (Pearce, 2018). For example, the employer has to provide the tools and materials needed by the employee to perform tasks conferred by the employer. Also, the employee may only work for one proprietor and the relationship should be continuous. Independent contractors use their tools and equipment to perform the tasks assigned to them. Independent contractors can work with multiple clients and their relationship with their employer is regarded as temporary.
Organization Liabilities upon Termination of a Contract
Upon termination of the contract, the two parties do not have any future obligations to each other. However, either of the parties can be held liable for breach of the terms of the contract before the termination. The terms of the contract may specify the remedies upon the termination of a contract. One of the liabilities may be monetary/compensatory damages, which are awarded to the innocent party (Pearce, 2018). Another liability is restitution, which is intended to put the party that suffered the breach in the position they were in before the contract was entered.
Conclusion
In summary, based on the two legal tests, Gary is an employee of the organization. This is because the conditions set out under the FSLA on who is an employee are similar to the conditions in which Gary’s contract was structured. The FSLA differentiates who is an independent contractor and who is an employee based on five legal tests but two tests outweigh the others.
References
Fair Labor Standards Act 2021(US) 86 FR 1168 (U.S.A.).
Pearce, J. A. (2018). The future of independent contractors and their status as non-employees: Moving on from a common law standard. Hastings Business Law Journal, 14(1), 1-35.
Posner, E. A. (2021). The economic basis of the independent contractor/employee distinction. Texas Law Review, 100(2), 353.