Introduction:

Generally speaking, an employee is someone who works for an employer. An employee is controlled by the employer and has little discretion in the timing and performance his or her tasks. Independent contractors, on the other hand, contract to do work and have the ability to perform the work without being subject to the control of the employer (as long as they meet the expected results required by the contract). This distinction is very important because employers enjoy a number of benefits when using independent contractors instead of employees. Employers do not have to pay for unemployment compensation with independent contractors, can easily discharge independent contractors, and (typically) are not responsible for the negligent acts of independent contractors (vicarious liability). Therefore, it may be extremely cost efficient for employers to pay independent contractors slightly more money to perform a task than it would be to have employees perform the same task.

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Independent Contractors:

Individuals who perform services for wages are presumed to be employees unless the wage-paying party (newspaper) can sufficiently meet the following two requirements:

  1. the person is free from control and direction in the performance of work; and
  2. the person is customarily engaged in an independent trade or business.

Therefore, if a newspaper wishes to hire independent contractors to deliver or distribute newspapers, these two requirements must be taken into consideration.

When examining whether the person is free from control and direction in the performance of work, the courts consider the following factors: control of the manner in which work is to be done;

  • responsibility for result only;
  • terms of agreement between the parties;
  • the nature of the work or occupation;
  • skill required for performance;
  • whether one employed is engaged in a distinct occupation or business;
  • which party supplies the tools;
  • whether payment is by the time or by the job;
  • whether work is part of the regular business of the alleged employer;
  • whether the alleged employer has the right to terminate the employment at any time;
  • whether taxes were deducted from claimant's pay;
  • whether the alleged employer offered on-the-job training; and
  • requirements demanded by the alleged employer

Although courts look to the above factors when analyzing whether someone is an independent contractor, the most important factor is whether the employer has the right to control the work to be done and the manner in which it is performed. If the employer is found to have such a right, the courts will declare the relationship to be one of employer-employee and not one of contractee-independent contractor.

Factors used to determine if claimant is engaged in an independent trade or business are whether the individual was capable of performing the activities in question for anyone who wished to avail themselves of their services, and whether nature of business compelled individual to look to only a single employer for the continuation of such services. However, the Commonwealth Court has held that adults delivering newspapers are in an independent trade or business, so this second requirement is relatively easy to meet.

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Recommendations: Just because someone is labeled as an independent contractor does not mean that the courts will agree with the classification. If a contractee-independent contractor relationship is to be established, it is important implement the following recommendations:

Just because someone is labeled as an independent contractor does not mean that the courts will agree with the classification. If a contractee-independent contractor relationship is to be established, it is important implement the following recommendations:
  • clearly spell out in the agreement that the person is an independent contractor;
  • give the independent contractor general guidelines or parameters to follow in the performance of the contractual duties (for example, give the independent contractor a general time frame in which to deliver the papers, such as between 3 - 6 a.m.);
  • do not reserve the right to control the work to be done or the manner in which it is to be performed;
  • do not micro-manage the way the independent contractor is to perform the required duties;
  • avoid any day-to-day or direct supervision over the independent contractor;
  • pay the independent contractors a set fee for performing the assigned task, do not pay them an hourly wage;
  • have the independent contractors supply their own vehicles or equipment;
  • do not prevent the independent contractor from delivering for other companies, even competitors; and
  • do not withhold taxes or other charges from the individual's pay.

For an example of when a delivery person was found to be an independent contractor, see Venango Newspapers v. Unemployment Compensation Board of Review, 631 A.2d 1384, 158 Pa.Cmwlth. 379 (Pa.Cmwlth. 1993). An example of when the Commonwealth Court held that a person who distributed newspapers to carriers was an employee, see York Newspaper Co. v. Unemployment Compensation Board of Review, 635 A.2d 251, 160 Pa.Cmwlth. 475 (Pa.Cmwlth. 1993).

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Unemployment Compensation:

Under 43 P.S. §753, an employee is defined as an individual (including minors, individuals under the age of 18) who performs services for an employer in an employment subject to the Unemployment Compensation Law. This broad definition includes the majority of people who directly perform services for a company. However, certain types of individuals are statutorily excluded from the definition of an employee. Most notably for the newspaper industry are minors who distribute newspapers (newspaper carriers). Under Pennsylvania law, they are considered independent contractors, not employees. This is a statutory exception specifically geared towards minors. Adult carriers can be, and typically are, independent contractors, but employers need to spell this out in the contract.

Note: this newspaper carrier exclusion does not include distributors (people who deliver the newspapers to a point for subsequent delivery or distribution (pick-up for delivery by newspaper carriers)).

Unemployment compensation is payable only to employees. Because newspaper carriers who are minors do not fall within the definition of "employees," they are not eligible for unemployment compensation. However, any persons who are not independent contractors are considered employees for which the employer is responsible for making the appropriate contributions to the Unemployment Compensation Fund. 43 P.S. §801

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Workman's Compensation:

Independent contractors cannot make claims for Workman's Compensation because they are not considered employees under the Workmen's Compensation Act. 77 P.S. §22

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Vicarious Liability:

A newspaper can be held liable for the negligent acts of its employees. This concept is known as vicarious liability. However, courts have traditionally held that a newspaper cannot be held liable for the same acts done by an independent contractor. Therefore, if an independent contractor were to get into an accident while delivering papers for the newspaper, the newspaper is not liable for any damages that result from the accident.

Note: Although the choice of transportation is up to the independent contractor, if the job being subcontracted requires driving, the newspaper is required to investigate the driving competency of the independent contractor to make sure that he is not placing the public at risk.

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Other Statutes Applicable to Newspaper Carriers

Minimum age/ working hours: Newspaper carriers must be at least 11 years old to distribute or sell newspapers. Any minor under 16 years of age is permitted to work before 5 a.m. or after 8 p.m. (including weekends). Just verify this with current law. 43 P.S. §48

Use of automobiles in the delivery of merchandise: Minors 16 years of age and under may ride on automobiles while engaged in such occupations as delivery of merchandise, but shall not assist in the operation of such automobile. Minors 17 years of age are permitted to operate a single vehicle not in excess of 30,000 pounds registered gross weight or any such vehicle towing a trailer not in excess of 10,000 pounds gross weight. 34 P.A. Code §11.74

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