N.D. Admin Code 92-01-02-49 - Determination of employment
1. Any
service performed for another for remuneration under any agreement or contract
of hire express or implied is presumed to be employment unless it is shown that
the individual performing the service is an independent contractor as
determined by the "common law" test.
a. An
employment relationship exists when the person for whom services are performed
has the right to control and direct the individual person who performs the
services, not only as to the result to be accomplished by the work but also as
to the details and means by which that result is accomplished. It is not
necessary that the employer actually direct or control the manner in which the
services are performed; it is sufficient if the employer has the right to do
so. The right to discharge is a significant factor indicating that the person
possessing that right is an employer. The right to terminate a contract before
completion to prevent and minimize damages for a potential breach or actual
breach of contract does not, by itself, establish an employment relationship.
Other factors indicating an employer-employee relationship, although not
necessarily present in every case, are the furnishing of tools and the
furnishing of a place to work to the person who performs the services. The fact
that the contract must be performed at a specific location such as building
site, does not, by itself, constitute furnishing a place to work if the nature
of the work to be done precludes a separate site or is the customary practice
in the industry. If a person is subject to the control or direction of another
merely as to the result to be accomplished by the work and not as to the means
and methods for accomplishing the result, the person will likely be an
independent contractor. A person performing services as an independent
contractor is not as to such services an employee. Persons such as physicians,
lawyers, dentists, veterinarians, public stenographers, and auctioneers,
engaged in the pursuit of an independent trade, business, or profession, in
which they offer their services to the public, are independent contractors and
not employees.
b. In determining
whether a person is an independent contractor or an employee under the "common
law" test, the following twenty factors are to be considered:
(1) Instructions. A person who is required to
comply with other persons' instructions about when, where, and how the person
is to work is ordinarily an employee. This control factor is present if the
person or persons for whom the services are performed have the right to require
compliance with instructions.
(2)
Training. Training a person by requiring an experienced employee to work with
the person, by corresponding with the person, by requiring the person to attend
meetings, or by using other methods, indicates that the person or persons for
whom the services are performed want the services performed in a particular
method or manner.
(3) Integration.
Integration of the person's services into the business operations generally
shows that the person is subject to direction and control. When the success or
continuation of a business depends to an appreciable degree upon the
performance of certain services, the persons who perform those services must
necessarily be subject to a certain amount of control by the owner of the
business.
(4) Services rendered
personally. If the services must be rendered personally, presumably the person
or persons for whom the services are performed are interested in the methods
used to accomplish the work as well as in the results.
(5) Hiring, supervising, and paying
assistants. If the person or persons for whom the services are performed hire,
supervise, and pay assistants, that factor generally shows control over the
persons on the job. However, if one person hires, supervises, and pays the
other assistants pursuant to a contract under which the person agrees to
provide materials and labor and under which the person is responsible only for
the attainment of a result, this factor indicates an independent contractor
status.
(6) Continuing
relationship. A continuing relationship between the person and the person or
persons for whom the services are performed indicates that an employer-employee
relationship exists. A continuing relationship may exist when work is performed
at frequently recurring although irregular intervals.
(7) Set hours of work. The establishment of
set hours of work by the person or persons for whom the services are performed
is a factor indicating control.
(8) Full time required. If the person must
devote substantially full time to the business of the person or persons for
whom the services are performed, such person or persons have control over the
amount of time the person is able to do other gainful work. An independent
contractor, on the other hand, is free to work when and for whom the person
chooses.
(9) Doing work on the
premises of the person or persons for whom the services are performed. If the
work is performed on the premises of the person or persons for whom the
services are performed, that factor suggests control over the person,
especially if the work could be done elsewhere. Work done off the premises of
the person or persons receiving the services, such as at the office of the
worker, indicates some freedom from control. This fact by itself does not mean
that the person is not an employee. The importance of this factor depends on
the nature of the service involved and the extent to which an employer
generally would require that employees perform such service on the employer's
premises. Control over the place of work is indicated when the person or
persons for whom the services are performed have the right to compel the worker
to travel a designated route, to canvass a territory within a certain time, or
to work at specific places as required.
(10) Order or sequence set. If a person must
perform services in the order or sequence set by the person or persons for whom
the services are performed, that factor shows that the person is not free to
follow the person's own pattern of work but must follow the established
routines and schedules of the person or persons for whom the services are
performed. Often, because of the nature of an occupation, the person or persons
for whom the services are performed do not set the order of the services or set
the order infrequently. It is sufficient to show control, however, if such
person or persons retain the right to do so.
(11) Oral or written reports. A requirement
that the person submit regular or written reports to the person or persons for
whom the services are performed indicates control. By contract, however,
parties can agree that services are to be performed by certain dates and the
persons performing those services can be required to report as to the status of
the services being performed so that the person for whom the services are being
performed can coordinate other contracts that person may have which are
required in the successful total completion of a particular project.
(12) Payment by hour, week, month. Payment by
the hour, week, or month indicates an employer-employee relationship, provided
that this method of payment is not just a convenient way of paying a lump sum
agreed upon as the cost of a job. Payment made by the job or on a straight
commission generally indicates that the worker is an independent contractor.
(13) Payment of business or
traveling expenses, or both. If the person or persons for whom the services are
performed ordinarily pay the person's business or traveling expenses, or both,
the person is an employee. An employer, to be able to control expenses,
generally retains the right to regulate and direct the person's business
activities.
(14) Furnishing of
tools and materials. If the person or persons for whom the services are
performed furnished significant tools, materials, and other equipment, it is an
indication an employer-employee relationship exists.
(15) Significant investment. If the person
invests in facilities that are used by the person in performing services and
are not typically maintained by employees (such as the maintenance of an office
rented at fair value from an unrelated party), or if the person invests in
other business expenses (such as equipment and supplies, vehicles, liability
insurance, advertising, or other promotion of services), that factor tends to
indicate that the person is an independent contractor. Lack of investment in
expenses relative to the performance of services indicates dependence on the
person or persons for whom the services are performed for such facilities and
indicates the existence of an employer-employee relationship.
(16) Realization of profit or loss. A person
who may realize a profit or suffer a loss as a result of the person's services
(in addition to the profit or loss ordinarily realized by employees) is
generally an independent contractor, but the person who cannot is an employee.
If the person is subject to a risk of economic loss due to significant
investment or a bona fide liability for expenses, that indicates that the
person is an independent contractor. The risk that a person will not receive
payment for services, however, is common to both independent contractors and
employees and thus does not constitute a sufficient economic risk to support a
finding of an independent contractor.
(17) Working for more than one firm at a
time. If a person performs services under multiple contracts for unrelated
persons or firms at the same time, that generally indicates that the person is
an independent contractor. A person who performs services for more than one
person may be an employee for each of the persons, especially when such persons
are part of the same service arrangement.
(18) Making service available to general
public. If a person makes the person's services available to the general public
on a regular and consistent basis that indicates an independent contractor
relationship.
(19) Right to
dismissal. The right to dismiss a person indicates that the person is an
employee and the person possessing the right is an employer. An employer
exercises control through the right of dismissal, which causes the person to
obey the employer's instruction. An independent contractor, on the other hand,
cannot be fired without liability for breach of contract so long as the
independent contractor produces a result that meets the contract
specifications.
(20) Right to
terminate. If either person has the right to end the relationship with the
person for whom the services are performed at any time the person wishes
without incurring liability, that indicates an employer-employee relationship.
If a contract can be terminated by the mutual agreement of the parties before
its completion or by one of the parties to the contract before its completion
to prevent a further breach of contract or to minimize damages, that indicates
an independent contractor relationship.
2. The factors described in paragraphs 3, 6,
15, 16, 17, 18, 19, and 20 of subdivision b of subsection 1 must be given more
weight in determining whether an employer-employee relationship exists.
Notes
General Authority: NDCC 65-02-08
Law Implemented: NDCC 65-01-03
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.