So many problems in the law arise out of the struggle to define words. Common words signifying simple ideas in the mind of a layperson often stir titanic semantic struggles in court. The meaning of words, as determined by legislatures and courts of law, often has profound implications for the lives of those involved in a particular case.

A good example is the attempt to define an “employee.” While the simple answer is that an employee is somebody who is employed to work for an employer, the law differentiates between an “employee” and an “independent contractor.” Determining if you are an employee or an independent contractor makes a difference in most areas of law relevant to workers: contracts, tax law, workers’ compensation, wage and hour laws, and other laws created to protect employees.

A recent Michigan Court of Appeals decision is a useful introduction to making the legal distinction between employee and independent contractor in Michigan. In Giera v. City of Belleville, the court reviewed the relevant case law. Giera v. City of Belleville, Case No. 294959, 2012 WL 2335920 (Mich Ct App June 19, 2012). The facts and disposition of the case are not as important to our discussion as is the court’s clear run-down of what makes an employee or an independent contractor.

The per curiam opinion cited Candelaria v. BC Gen Contractors, Inc, 236 Mich.App 67, 73; 600 NW2d 348 (1999), citing Kamalnath v. Mercy Memorial Hosp Corp, 194 Mich.App 543, 553; 487 NW2d 499 (1992), which defined an independent contractor as “one who, carrying on an independent business, contracts to do work without being subject to the right of control by the employer as to the method of work but only as to the result to be accomplished.” The Court of Appeals of Michigan generally uses what the opinion calls the “economic realities test” to decide the employee/independent contractor question. This is a totality of circumstances test, emphasizing “(1) control of a worker's duties, (2) payment of wages, (3) right to hire, fire and discipline, and (4) performance of the duties as an integral part of the employer's business towards the accomplishment of a common goal” citing Mantei v. Mich. Pub Sch Employees Retirement Sys, 256 Mich.App 64, 78–79; 663 NW2d 486 (2003). The opinion also notes that the court will take into consideration the parties’ own characterizations of the relationship. Did the worker think of herself as an employee? What does the work agreement suggest? Is the type of work that the worker is doing normally done by true employees or by outside people, contracted in?

All of these factors and questions go into making the decisions in the close cases. Look to the Giera explanation of the “economic realities” test if you are unsure of your legal status as a worker. If you are considering legal action against an employer, whether you are a true employee or rather an independent contractor can make all the difference in the outcome. Be sure to review your status with an attorney before making any final decisions.