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Independent contractions are not to be placed on the payroll

Independent contractions are not to be placed on the payroll
Source: Audit Report issued by the State Comptroller

In reviewing internal controls over selected financial activities of the Washington-Saratoga-Warren-Hamilton-Essex BOCES, the Comptroller found that although the BOCES had established procedures that were designed to help distinguish employees from independent contractors, the procedures were not uniformly applied. As a result, the auditors found that the BOCES had placed two professionals who should have been treated as independent contractors on the payroll and incorrectly enrolled them in the New York State and Local Retirement System.

The U.S. Supreme Court set out a number of factors to be considered in determining whether or not an individual is an employee or an independent contractor in Nationwide Mutual Insurance Company v Darden, 503 US 318.

The Supreme Court's ?common law test? for determining who qualifies as an ?employee? in Darden lists the following factors to be considered in making the determination:

The hiring party's right to control the manner and means by which the work is accomplished;

The skill required;

The source of the supplies and tools used by the individual;

The location of the work;

The duration of the relationship between the parties;

Whether the hiring party has the right to assign additional duties or projects to the hired party;

The extent of the hired party's discretion over when and how long to work;

The method of payment;

The hired party's role in hiring and paying assistants;

Whether the work is part of the regular business of the hiring party;

Whether the hired party is in business;

Whether the hiring party provides employee benefits; and

The tax treatment of the hired party.?

Insofar as service in the public sector is concerned, another test would be the process used in selecting the individual; i.e., were the controlling provisions of law with respect to appointment to a position in the public service observed by the "appointing authority."

The full text of the Comptroller?s Audit Report is posted on the Internet at:
http://www.osc.state.ny.us/localgov/audits/schools/2008/wswheboces.pdf

Full post as published by New York Public Personnel Law on October 30, 2008 (boomark / email).