Independant Contractor or Employee?

I do consulting work without a contract - am I an independent contractor or employee?

It depends on a few things according to the Court in Aymes v. Bonelli. [*1]

What happened in the Aymes case?

Bonelli hired Aymes to create software for his swimming pool business. The program maintained records, inventory, sales figures, purchase orders, and price changes. There was no written agreement between Bonelli and Aymes.

Aymes did most of his work at Bonelli’s office, using Bonelli’s computers. He usually worked alone, and was given considerable autonomy and flexibility. He worked semi-regular hours. Sometimes he was paid by the hour, sometimes he was paid by the project with a bonus.

Aymes was not given health or other insurance benefits, nor were taxes withheld from his salary.

What did Aymes argue?

Aymes argued that because Bonelli did not provide benefits or pay social security taxes, he is an independent contractor.

What did the Court say?

The Court agreed. Five factors are relevant when determining if someone is an independent contractor:

1. The hiring party’s right to control the manner and means of creation
2. The skill required
3. Whether employee benefits are provided
4. The tax treatment of the hired party
5. Whether the hiring party has the right to assign additional projects to the hired party

The Court said that all 5 are relevant, but employee benefits and tax treatment are the most important.

Why is this distinction important?

It matters in determining who owns the work created. If you are hired by a company, and there is no contract, you probably own the work if you are an independent contractor. But, if you are considered an employee, then the company probably owns the work.

[*1] Aymes v. Bonelli, 980 F.2d 857 (2d Cir. 1992)