Structuring Independent Contractor Agreements to Avoid Misclassification Liability

Employers are increasingly using independent contractors rather than employees to perform work. At the same time, there has been an increase in misclassification claims by the DOL, state governments and workers.

In May 2017, FedEx agreed to a $227 million joint settlement of independent contractor misclassification class claims by drivers across 19 states, having settled a prior misclassification suit for $228 million. DoorDash food delivery recently agreed to pay $5 million to settle a misclassification lawsuit.

States and localities are stepping up efforts to protect independent contractors. New York City’s Freelance Isn’t Free Act took effect in May 2017 and requires all contracts with freelance workers worth $800 or more to be in writing. Failure to have a written contract can result in additional payment to the contractor, plus attorneys' fees and costs, even absent other violations.

Misclassification errors can expose employers to significant liability under state and federal tax and employment laws. The first step in preserving independent contractor status is a well-drafted agreement.

Listen as our panel discusses effective independent contractor agreement drafting techniques to avoid or reduce misclassification liability. The panel will discuss how to tailor the agreement to the specific situation; analyze differing IRS, DOL and EEOC definitions; outline key provisions such as disclaimers; and pinpoint industries and positions that carry a presumption of employee status.