Question

Emilie has a maintenance contract with a life Insurance company to shovel snow, mow lawns, and maintain fences. She has agreed to keep the premises neat, in good repair, and easily accessible for employees and customers. She uses her own small tools and snow plow, but the lawn mower and snow blower are owned by the company. She has other contracts with organizations in the same area and, if necessary, sub-contracts the work out, depending on the weather conditions. Her contact at the site is the manager of Accounts Payable (AP) and she is paid a fixed amount each month by cheque, according to the contract she has signed with the company. Is Emilie an employee of the Life Insurance company? Write a memo, in proper memo format, to the manager of Accounts payable, explaining your response.

Answer 1

Memo:

To

The Manager (Accounts Payable)

Date: 11th March 2018

Subject: Employee or independent contractor? What is Emilie's status?

With reference to IRS’s FS-2017-09 an individual will be considered as an independent contractor if the payer has no control over how the work will be done or what will be done. Payer has the right to control only the result of the work.

In this case Emilie is an independent contractor and not an employee of the life insurance company. She has the flexibility to sub-contract the work and so the life insurance company has no control over how the work will be done.

Secondly the life insurance company has no control or right to direct the financial as well as business aspects of Emilie’s job. We can construe that Emilie’s services are available to the market and so she is free, as an independent contractor, to seek out business opportunities in the market.

Thirdly Emilie’s relationship with the life insurance company clearly spells out the fact that she is an independent contractor. She does not receive any employee type benefits like insurance, pension plans, vacation pay or sick pay.