Comparing federal and West Virginia tests for independent contractor status

The U.S. Supreme Court has remarked that “few problems in the law have given greater variety of application and conflict in results than the cases arising in the borderland between what is clearly an employer-employee relationship, and what is clearly one of independent entrepreneurial dealing.” With that in mind, let’s take a look at the differences between employee classification in federal and West Virginia law.

Why is potential misclassification important?

An employer that misclassifies an employee as an independent contractor can face steep costs and penalties. These include, but are not limited to:

• Back wages, including overtime compensation, under federal and state wage-and-hour laws;
• Employee benefits, including vacation and paid time off (PTO) pay, retirement benefits, and health insurance;
• Workers’ compensation benefits;
• Unpaid payroll taxes;
• Liquidated damages; and
• Civil fines.

In addition, misclassification can lead to liability under other employment laws that don’t protect independent contractors. For example, an employee might be entitled to a reasonable accommodation under the Americans with Disabilities Act (ADA) where an independent contractor might not be afforded the same protections. An employee might be entitled to notice before a mass layoff under the Worker Adjustment and Retraining Notification (WARN) Act, but an independent contractor is typically not entitled to the same advance notice.