Maine Adopts Uniform Standard for ‘Independent Contractor’

Maine has recently adopted a new, uniform standard for who can be classified as an “independent contractor” for worker’s comp and other employment-related cases.

The change went into effect on Dec. 31, 2012. Previously, the state’s department of labor, the workers’ compensation board and the revenue services used different criteria.

Services performed by an individual for remuneration are considered to be employment unless it is shown that the individual is free from the essential direction and control of the employing unit.

To establish a worker as an independent contractor, the employer should prove that the individual meets all criteria in Section A and three of the criteria in Section B.

Section A:

1. The person has the essential right to control the means and progress of the work except as to final results;
2. The person is customarily engaged in an independently established trade, occupation, profession or business;
3. The person has the opportunity for profit and loss as a result of the services being performed for the other entity;
4. The person hires and pays the person’s assistants, if any, and, to the extent such assistants are employees, supervises the details of the assistants’ work; and
5. The person makes the person’s services available to some client or customer community, even if the person’s right to do so is voluntarily not exercised.

Section B:

1. The person has a substantive investment in the facilities, tools, instruments, materials and knowledge used by the person to complete the work;
2. The person is not required to work exclusively for the other individual or entity;
3. The person is responsible for satisfactory completion of the work and may be held contractually responsible for failure to complete the work;
4. The parties have a contract that defines the relationship and gives contractual rights in the event the contract is terminated by the other individual or entity prior to completion of the work;
5. Payment to the person is based on factors directly related to the work performed and not solely on the amount of time expended by the person;
6. The work is outside the usual course of business for which the service is performed; or
7. The person has been determined to be an independent contractor by the IRS.

Topics Contractors Maine