The court applied a many-factor take a look at, referred to as the "economic realities take a look at," associated determined that the link between the nightclubs in dispute and also the dancers is in line with an employer-employee relationship, not associate freelance contractor relationship.
There area unit edges to classifying employees as freelance contractors, the most important of that is price savings. If a employee is
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an freelance contractor, the leader avoids desirous to pay overtime or edges, the employer's share of Social Security and Medicare taxes, and different taxes.
However, misclassifying workers as freelance contractors exposes employers to fines and penalties from state and federal Departments of Labor and also the federal agency, furthermore as requiring the leader to pay back wages and taxes.
Courts use a six-factor take a look at to see if an individual is associate worker or associate freelance contractor. The factors include:
1. The degree of management the leader has over the style during which work is performed;
2. The worker's chance for profit or loss;
3. The worker's investment in instrumentality or material, or his employment of different workers;
4. The degree of talent required;
5. The length of the operating relationship, and;
6. The degree to that the services performed area unit integral to the employer's business.
According to American state inducer and lawyer Jake Posey, nobody issue is a lot of vital than the others. Rather, the court appearance in any respect the factors to see the economic realities of the link.