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Defining an Independent Contractor

The case discussed in a previous post, Naseef v Wallside, Inc., addresses the issue of how the law distinguishes an independent contractor from an employee.

The context n Naseef is pretty typical: is the subcontractor on a construction job an independent contractor? The Court affirms that Michigan law follows the “control test” in making that determination. Control can come in a lot of forms, but it is usually based upon who pays the employees, who sets their hours, plans their work and determines the methods by which they perform their work. Applying that test, it was pretty clear to the court that the subcontractor was an independent contractor.

We are frequently asked to review or draft contracts in which the parties declare their independence from one another, i.e., they are independent contractors. That is an important step in making this distinction, but it is doesn’t get the parties across the finish line all by itself. Contracting parties can declare their independence all they want, but if that declaration is not backed up by how they actually operate, a contract clause won’t save them.

For example, the general contractor needs to set the schedule for when certain work must be finished. As long as the scheduling is handled like that, and the general contractor is not telling the sub-contractors and laborers exactly when and how to perform their work, their independence is likely to be respected by the courts and Michigan law. The “line” can seem quite blurry at times.

A little legal guidance on this can go a long way. We’re here to help.

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