question-markSo I was trolling through the Equal Employment Opportunity Commission’s quarterly Digest of Equal Employment Opportunity Law (because, yes, I am that much of an employment law nerd), and came across an article that I thought was of particular interest: “Stating a Claim in the EEO Process: Determining One’s Status as Either an Agency Employee or Independent Contractor.” Now this article is supposed to apply only to the federal government agencies as the employer – but I think the principles set forth in it provide guidance to what the EEOC’s position would be for private employers as well. (This is important because employees are covered by federal anti-discrimination and other employment laws; independent contractors are not).

Written by EEOC attorney Navarro Pulley and intern Laura Revolinski, the article compiles the EEOC’s resources (documents and cases) on the topic and provides a general overview of the EEOC’s position on this hot topic. The EEOC’s last official guidance on this issue was in 1997, with the issuance of its “Enforcement Guidance: Application of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms.” Other federal agencies have more recently weighed in on this topic. The Department of Labor issued an Administrator’s Interpretation on independent contractor status in July 2015, as we discussed in a prior blog post. And the National Labor Relations Board is looking at this issue, as we discussed in our June 2016 E-Update (our monthly newsletter). So it’s not surprising that the EEOC wants to provide a more updated position.

The article states that the EEOC has applied the common law of agency test that was set out in the federal sector case of Ma v. Dept. of Health and Human Servs. (Note that this is different than the very broad “economic realities” test applied by the DOL). Under the Ma test, the Commission looked at thirteen factors. These factors are generally restated as part of the fifteen-factor test for employment status set out in the EEOC Compliance Manual (used by EEOC investigators), which the article then discusses (and would be the test applied by the EEOC now). These factors are to be used to determine whether a worker is in an employment relationship with an employer – a fact-specific determination that “depends on whether the [hiring party] controls the means and manner of the [worker]’s work.” The first thirteen factors generally restate the Ma factors, but two more have been added to the end:

  1. The employer has the right to control when, where, and how the worker performs the job.
  2. The work does not require a high level of skill or expertise.
  3. The employer furnishes the tools, materials, and equipment.
  4. The work is performed on the employer’s premises.
  5. There is a continuing relationship between the worker and the employer.
  6. The employer has the right to assign additional projects to the worker.
  7. The employer sets the hours of work and the duration of the job.
  8. The worker is paid by the hour, week, or month rather than the agreed cost of performing a particular job.
  9. The worker does not hire and pay assistants.
  10. The work performed by the worker is part of the regular business of the employer.
  11. The worker is not engaged in his/her own distinct occupation or business.
  12. The employer provides the worker with benefits such as insurance, leave, or workers’ compensation.
  13. The worker is considered an employee of the employer for tax purposes (i.e., the employer withholds federal, state, and Social Security taxes).
  14. The employer can discharge the worker.
  15. The worker and the employer believe that they are creating an employer-employee relationship.

The article notes that, in order to find an employment relationship, not all the factors – or even a majority – must be met. Instead, the determination is based on all the circumstances. Of note, the article states that how the parties designate the relationship (whether as an employee or independent contractor”) is not taken into account.

The article also touches on the topic of joint employment, which can exist when both the hiring party and a staffing firm jointly employ the staffing agency workers. The EEOC will examine the the amount and type of control that each entity exerts over the worker’s work, regardless of whether the worker is on the hiring party’s payroll, in order to determine if either or both are employers of the worker. To establish whether the hiring party is a joint employer, the EEOC applies the same test stated above with regard to independent contractor v. employee status – does the hiring party “control the means and manner of the [worker]’s work.” The article then provides an example of when the hiring party is considered an employer jointly with the staffing agency:

For example, the [hiring party] is an employer of the [worker] if it supplies the work space, equipment, and supplies, and if it has the right to control the details of the work performed, to make or change assignments, and to terminate the relationship.

In summary, the EEOC’s test primarily turns upon control. This is in direct contrast to the DOL’s test, in which it states that no one factor – specifically control – is determinative of whether a worker is an employee. So be warned – the different federal agencies will apply different tests to determine employee status! (And I didn’t even get into the IRS’s three-factor test… Or the various tests under state laws!)