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The difference between an employee and an independent contractor

On Behalf of | Jul 18, 2022 | Employment Law For Employers

Most Kentucky business executives understand the meaning of vicarious liability: an employer is vicariously liable for any tort committed by an employee who is acting within the scope of their employment. An important exception to this rule is that an employer is not vicariously liable for any agent over whom the employer does not exercise control.

Such an agent is usually referred to as an independent contractor. The important question, then, is what facts distinguish an independent contractor from an agent or employee? 

A recent analysis of the question

A recent analysis of this question traced Kentucky’s common law on agency relationships and vicarious liability. The analysis concluded that a principal cannot be held liable for the acts of an agent whom the principal did not control. Kentucky courts have appended other factors to this overriding factor:  

  • Is the employee in a distinct occupation or business?
  • The type of work and whether that work is supervised by the employer or another specialist
  • The skill required in the particular occupation
  • Does the employer provide the necessary tools to do the job and the workplace? 
  • The payment method: is it an hourly rate or a per-project fee? 
  • Is the work a normal part of the employer’s business?
  • Do the parties believe they are creating the relationship of master and servant?  
  • Is the main person actually in business? 

Some Kentucky courts have also used concepts borrowed from workers’ compensation law to resolve this issue, but workers’ compensation rests on different principles than does the standard vicarious liability. It does not require a law degree to see that this list of 10 factors is very cumbersome and unpredictable.

What is the future of this rule?

As plaintiffs’ attorneys become more adept at invoking concepts from workers’ compensation law, defense lawyers can be expected to push for a shorter list of determinative factors. Anyone resisting a claim based on virtual liability may wish to consult an experienced business attorney for an analysis of the evidence and an opinion on how a court may rule on this important question.