In 2014, the U.S. Department of Labor ramped up its scrutiny of the classification of workers as “independent contractors.” Both the National Labor Relations Board and the Internal Revenue Service followed suit. Why are three, major governmental agencies laser-focused on this issue?
The simple answer is The Affordable Care Act. The ACA, sometimes called “Obama Care,” requires employers to offer health insurance to all of its “full-time employees,” which term is defined as an employee working 30 hours or more each week. Since independent contractors are not employees, businesses are not required to offer them insurance.
The temptation to classify workers as independent contractors seems to have been a mighty one for many companies, resulting in several multi-million dollar lawsuits in 2014. This issue remains on the “hot topic” list for the DoL in 2015. (For a fantastic article on What the Department of Labor will be doing this year, please visit: Here )
The “independent contractor vs. employee” issue strongly impacts the language service provider (“LSP”) industry. Many language service providers continue to use independent contractor interpreters. Here is some insight on why many LSPs have migrated to the W-2 employee model for its interpreters.
The IRS, whose test tends to be used by other federal and state government agencies, explains that the difference between an independent contractor and an employee comes down to the degree of control over the workers’ duties and responsibilities. More control leads to employee status. Facts to consider in this analysis fall into three main categories:
- Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
- Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
- Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
This list isn’t an “all-or-nothing” proposition. Rather, “businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. … The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.”
So, why would an LSP make the decision to hire its interpreters as employees? I believe answer comes down to the right and ability to ensure that interpreters are qualified and compliant. In fact, I believe interpreters must be employees in order for LSPs to:
- Require interpreters to meet the medical compliance standards set by clients, both at-hire and annually.
- Ensure that interpreters meet annual continuing education requirements and/or certification requirements.
- Insist that interpreters follow the ethical guidelines set by an LSP.
- Require interpreters to adhere to personal grooming and hygiene standards, abide by uniform/wardrobe requirements, wear ID badges, and the like.
- Set the pay, reimbursement and benefits offered to interpreters;
- Maintain the authority to issue disciplinary actions, such as suspensions, mandatory re-training, or even dismissal;
- Ensure workers’ compensation coverage for interpreters while working on client premises;
- Provide required “tools of the trade,” like timesheets, lap tops, tablets, cell phones, software, web-based scheduling systems, interpreter portals, and the like, andrequire that interpreters use them.
I expect this issue will remain subject to heated debate, politics and advocacy in 2015, and certainly there will remain circumstances under which independent contractor interpreters will remain appropriate. However, one thing is certain: using the W-2 employee model allows an LSP to ensure that it provides only highly-qualified, competent, and compliant interpreters to its clients – no matter the language.
 Special Thanks to David L. Woodard, partner at Poyner Spruill, for permission to re-post his article.