Question

Agency is a contractual relationship, involving an agent and a principal, in which the agent is given the authority to represent the principal in dealings with third parties. The most common example is an employer-employee relationship wherein an agent (employee) is given the power by a principal (employer) to act on his or her behalf. An agent may be an employee or an independent contractor. A principal is a person who employs an agent to act on his or her behalf.

A principal (employer) has full control over his or her employee. The employee must complete the work assigned by following the instructions of the employer. An independent contractor is an individual hired by an employer to perform a specific task. The employer has no control over the methods used by the independent contractor. The following are among those who act independently of an employer: electricians, carpenters, plumbers, television repairpersons, and automobile mechanics. brokers, and investment advisors. Independent contractors may also employ others in their Independent contractors also include professional agents such as lawyers, physicians, accountants, securities brokers, insurance brokers, real estate field who will be bound to them as employees.

• The relationship between employers and employees or independent contractors is a fiduciary one. Why?
• What are the Duties of Employees?
• What are the Duties of Independent Contractors?
• How does a court determine if you are an employee or an independent contractor?
• As an employer which would you hire?

Answer 1

1. Employees and independent contractors may have different fiduciary duties. An employee owes a fiduciary duty to an employer. ... Employers can directly control how and when an employee completes his or her work. The same control over the operative details cannot be exerted over an independent contractor.

An employer generally controls the “operative details” of an employee’s work. This means the employer generally tells the employee when and how to complete the work. The employer also generally supports an employee with equipment or anything else needed to complete any given task. An independent contractor, as the name suggests, has independence on the how and the why of the job and is self-sufficient in his or her ability to get it completed without assistance. An independent contractor will also generally work for several different people instead of just one and will be paid per job instead of a wage or salary.

2. There are several duties of employees, I will list a few of them

(a) obey a lawful, reasonable order within the terms of the contract of employment.

(b) serve faithfully.

(c) cooperate with the employer.

(d) perform duties with proper care and diligence.

(e) account for all money or property received.

(f) indemnify the employer in appropriate cases.

(g) not to misuse the confidential information acquired while in service.

3. Independent contractors will have duties as mentioned in his contract.

(a) Independent contractors must complete their assigned projects on time and according to the specifications set forth in the independent contractor agreement.

(b) they should pay thier own taxes.

4. The courts have adopted a multi-factor test to determine whether a person is an employee or independent contractor. Courts place more weight on some matters, especially on who controls the way the work is performed.

• the degree to which the employer controls or directs the manner in which work is performed,  

• whether the worker's opportunity for profit or loss depends on his or her managerial skills,  

• whether the worker's duties are performed for the employer on an ongoing or permanent basis,  

• whether the service performed by the worker is an integral part of the employer's business,  

• the extent of the worker's investment in equipment or materials needed to perform the job, and  

• the degree to which the worker is engaged primarily for the benefit of the employer.​​​​​​

5. As an employer I would hire employee rather than independent contractor

When we hire an employee, you get the advantage of being able to completely control and direct that person's work during work time, to train the person in the way you want the job done, and to require that person to work only for us.

You can assign duties to an independent contractor and impose a deadline and work product, but you cannot tell that person how to get the job done. An independent contractor can work for others, can often set his or her hours of work, and often provides his/her own tools.

In conclusion, you should consider hiring an employee if:

* The work needs to be done under your supervision

* You want to control the hours of work and the tools and equipment used by the worker

* If this is a long-term need (such as preparing products for shipping), and

* If this work is essential to your business and not a peripheral job. For example, a marketing person is essential, while a cleaning crew may not be.