From the National Law Review, Michael Colgan Harrington and Madiha M. Malik discuss a recent Connecticut Supreme Court case in which an independent contractor who only had one client was still held to be an independent contractor under Connecticut’s ABC test. Michael and Madiha write:
Under Connecticut law, the “ABC” Test has long been applied to determine whether an employment relationship exists under the Unemployment Compensation Act. To be considered an independent contractor under the Act, the three factors of the ABC Test must each be met:
A.The individual is not directed or controlled, but works independently when performing the service, both under the contract for providing the service and in reality;
B.The service provided by the individual is not to be within the usual course of business of the employer or is performed outside all the employer’s places of business; and
C.The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as the service performed.
In Southwest, the Supreme Court provided valuable guidance that when evaluating the totality of circumstances under Part C, the following factors should be considered as they are indicative of the independent nature of the contractor’s business:
(1) The individual possesses a state license or specialized skills;
(2)The individual holds himself or herself out as an independent business through business cards, printed invoices, or advertising;
(3)The individual has a place of business separate from that of the potential employer;
(4)The individual has capital investment in the independent business, such as vehicles and equipment;
(5)The individual has his/her own liability insurance, showing that they manage their own risk;
(6)The individual performs services under his/her own name, as opposed to the potential employer’s name;
(7)The prospective employer uses other subcontractors as well;
(8)The individual has a saleable business or going concern with the existence of an established clientele;
(9)The individual performs services for more than one entity; and
(10)The performance of services affects the goodwill of the individual rather than the employer.
The existence of some or all of these factors can be used to prove Part C of the ABC Test.
Companies who use independent contractors must be prepared to prove each of the elements of the ABC Test.
This is another case in which Connecticut Supreme Court has supported the classification of a worker as an independent contractor. See CT Gives Employers Using Independent Contractors A Big Victory