Independent contractor

“ The long-standing regulations of the Treasury and the Federal Security Agency (H. Doc. 595, 79th Cong., 2d Sess.) recognize that independent contractors exist under the Act. The pertinent portions are set out in the margin. [8] Certainly the industry's right to control how 'work shall be done' is a factor in the determination of whether the worker is an employee or independent contractor. The Government points out that the regulations were construed by the Commissioner of Internal Revenue to cover the circumstances here presented. ”

“ Nor does the 'independent contractor' doctrine apply where the work that the contractor is to do of itself amounts to a nuisance or necessarily operates to injure or destroy the property of plaintiff. ”

“ The fact is not important that appellant does business as an independent contractor as long as the business that it does is commerce immune from regulation by the states. What is decisive is the nature of the act, not the person of the actor. ”

“ The work for hire concept isn’t limited to formal employment because a functionally identical relationship can be created by skillful drafting of contracts that purport to treat the (de facto) employee as an independent contractor. ”

“ The facts of the present case illustrate the propriety of submitting the dispute to collective negotiation. The Company's decision to contract out the maintenance work did not alter the Company's basic operation. The maintenance work still had to be performed in the plant. No capital investment was contemplated; the Company merely replaced existing employees with those of an independent contractor to do the same work under similar conditions of employment. Therefore, to require the employer to bargain about the matter would not significantly abridge his freedom to manage the business. ”

“ This purpose shines through the following clause in the contract in the Powell case: 'Whereas, The Government desires to have the Contractor, as an independent contractor on a cost-plus-a-fixed-fee basis, make all necessary preparations for the operation of said plant, including the training of operating personnel * * * but excluding the procurement and supervision of the installation of manufacturing facilities (to be done, under a like contract, by the contractor's parent corporation, Western Cartridge Company) ; and operate said plant ”

“ Thus there is no doubt that we should apply the commonlaw agency test here in distinguishing an employee from an independent contractor.
Since agency principles are to be applied, some factual background showing the relationship between the debit agents and respondent company is necessary. These basic facts are stated in the Board's opinion and will be very briefly summarized here. Respondent has district offices in most States which are run by a manager who usually has several assistant managers under him. ”

“ By analogy to these tax cases, state regulation of independent contractors has also been sustained in the face of increased economic burdens passed on indirectly to the Government by the independent contractors. ”

“ Mainly, it seeks to shift the debate from the term “contracts of employment” to the word “employee.” Today, the company emphasizes, the law often distinguishes between employees and independent contractors. Employees are generally understood as those who work “in the service of another person (the employer) under an express or implied contract of hire, under which the employer has the right to control the details of work performance.” ”

“ It is unnecessary to hold that the contractor might not be personally bound upon his promise made before the performance of the contract to transfer a portion of his profits to any third party. Whatever liabilities he might assume by such a promise, it would be an independent promise on his part, and would not let the promisee into an interest in the contract. ”

“ If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus, if such relationship exists, it is of no consequence that the employee is designated as a partner, co-adventurer, agent, or independent contractor. If such relationship exists, the fact that services are performed on a part-time basis is immaterial. The measurement, method, or designation of remuneration is immaterial if the individual is in fact an employee. The age of the individual is immaterial. ”

“ United States, 5 Cir., 22 F.2d 795, and notwithstanding that under traditional common-law concepts those performing such specialized activities would be regarded as independent contractors. [2] See, e.g., Brady v. ”

“ The taxpayer must be an 'employer' and the man who receives wages an 'employee.' There is no indication that Congress intended to change normal business relationships through which one business organization obtained the services of another to perform a portion of production or distribution. Few businesses are so completely integrated that they can themselves produce the raw material, manufacture and distribute the finished product to the ultimate consumer without assistance from independent contractors. ”

“ The independent contractors are utilized for a great variety of tasks on the Appliance Park premises. Some do construction work on new buildings; some install and repair ventilating and heating equipment; some engage in retooling and rearranging operations necessary to the manufacture of new models; others do 'general maintenance work.' These services are contracted to outside employers either because the company's employees lack the necessary skill or manpower, or because the work can be done more economically by independent contractors. ”

“ The mischief at which the Act is aimed and the remedies it offers are not confined exclusively to 'employees' within the traditional legal distinctions separating them from 'independent contractors.' Myriad forms of service relationship, with infinite and subtle variations in the terms of employment, blanket the nation's economy. ”

“ Instead, Congress spoke of “workers,” a term that everyone agrees easily embraces independent contractors. That word choice may not mean everything, but it does supply further evidence still that Congress used the term “contracts of employment” in a broad sense to capture any contract for the performance of work by workers. ”

“ So that when a man bids for more than one route, for instance, a hundred or a thousand, and gets them and carries them all absolutely according to his contract but one, he can be declared a failing contractor on all. What does that mean? It means not simply ruin to him, but ruin to every one of his sureties, unless they are in a condition to go on and carry the mail. I want you to understand something of the obligation of a contractor with the Government of the United States. ”

“ And, as we have already said, petitioner's contention would so reduce it. How universal must the manufacturing be? Will the purchase of an elemental part destroy it? And how subsidiary must the work of the subcontractor be not to relieve the contractor-take from him the character of a 'person manufacturing'? And such is the tangle of inquiries we encounter when we undertake to distinguish between what a contractor to deliver a thing does himself and what he does through others as subsidiary to his obligation. ”

“ Whenever, in the opinion of the Secretary of a Department, the profits realized or likely to be realized from any contract with such Department, or from any subcontract thereunder whether or not made by the contractor, may be excessive, the Secretary is authorized and directed to require the contractor or subcontractor to renegotiate the contract price. ”

“ Everything is left to him. The man who signs that contract gives a mortgage on his life, liberty, and pursuit of happiness. He has no redress. I simply call your attention to this to show you the obligation that a contractor takes upon himself. We will show you that he is under obligation to discharge any carrier that the Government does not like; that he has no right to carry any package or any letter that can go by mail; that he is to forfeit a trip when it is not run, or not to exceed three times the pay of a trip ”

“ Whether manufacturing products for sale to the Government or furnishing services, the cost-plus contractor has undertaken contractual obligations. If he properly performs his contract, he earns his fee; if he does not, he may lose the contract, be liable for damages and be forced to liquidate the organization which was built to perform the contract. Whatever limitations there are on entrepreneurial risks derive from the fact the companies perform under cost-plus-fixed-fee contracts, a widespread method of contracting with the Government. ”

“ The contractor, under the circumstances, could acquire no greater interest in the road than was held by the company. He did not exact any formal conveyance, but if he had, and one had been executed and delivered, the rule would be the same. ”

“ When a service contract for the maintenance of a public building expires and a follow-on contract is awarded for the same service, the successor contractor typically hires the majority of the predecessor's employees. On occasion, however, a follow-on contractor will hire a new work force, and the predecessor's employees are displaced.
As a buyer and participant in the marketplace, the Government is concerned about hardships to individuals that may result from the operation of our procurement system. ”

“ In terms of these factors, a finding of some commitment, arrangement or understanding between the prime contractor and the subcontractor should be required when the contracting officer's adverse interest arises by way of a subcontract, since only where some such arrangement exists can the officer be taken to have known that any undue benefit he confers on the prime contractor will not eventually redound to the profit of some other competing subcontractor. ”

“ Two more enactments deal with the earnings of the workmen of contractors and sub-contractors, make them a first charge on all contract money, give workers employed on works of construction a lien thereon, and compel a contractor's employer to hold back at least one-fourth of the contract money for a month after the completion of a contract, unless he shall be satisfied that all workmen concerned have been paid in full. A Wages Attachment Act limits without entirely abolishing a creditor's right to obtain orders of court attaching forthcoming earnings. ”

“ Such expectation, however reasonable, founded even upon the express promise of the employer that the funds shall be thus devoted, of itself avails nothing in favor of the contractor. Before there can arise any lien on the funds of the employer, there must be, in addition to such express promise, upon which the contractor relies, some act of appropriation on the part of the employer depriving himself of the control of the funds, and conferring upon the contractor the right to have them applied to his payment when the services are rendered or the materials are furnished. ”

“ If the contractor sees fit to let the work to a subcontractor, who employs labor and buys materials which are used to carry out and fulfil the engagement of the original contract to construct a public building, he is thereby supplied with the materials and lobor for the fulfilment of his engagement as effectually as he would have been had he directly hired the labor or bought the materials. ”

“ If such contractor should by accident be a carpenter, or an owner or vendor of lumber, yet he deals not with the owner in this capacity, but as an undertaker, who has covenanted for his own securities.
The title to this act shows its policy and intention. It is to secure, to 'mechanics and others, payment for labor done and materials found;' and the persons enumerated in the first section are, plainly, those mechanics and tradesmen whose personal labor or property have been incorporated into the building, and not the agents, supervisors, undertakers, or contractors, who employed them. ”

“ That was just the case here, for it was to one of these toad-stool contractors that the directors let the first contract, and engineers who do not advise their directors to have nothing to do with such public works contractors (!) I think deserve all the trouble they get into. Surely it is better to have a contractor who knows what work is and should be, even if he has but a small capital, than one who knows next to nothing about construction, and is financed by some loan-monger, or is at the mercy of some wire-puller? ”

“ We repeat, the present action may fairly be regarded as one by the United States itself to enforce the specific obligation of the contractor to make prompt payment for labor and materials furnished to him in his work. There is, therefore, a controversy here between the United States and the contractor in respect of that matter. The action is none the less by the government as a litigant party, because only one of the persons who supplied labor or materials will get the benefit of the judgment. ”

“ IN GENERAL.—Chapter 21 of division B of subtitle I of title 41, United States Code, is amended by adding at the end the following new section: “§ 2108. Prohibition on involvement by certain former contractor employees in procurements “An employee of the Federal Government may not participate personally and substantially in any award of a contract to, or the administration of a contract awarded to, a contractor that is a former employer of the employee during the 2-year period beginning on the date on which the employee leaves the employment of the contractor.”. ”

“ If a minister or the senior official responsible for contracting within
governmental unit or agency awarding the contract determines the requirement
being satisfied by the contract is of such importance to the public interest that
ceasing work will unduly harm the public interest, such minister or official
may, by written determination of such undue harm, and after notice to the
Tribunal, order the governmental unit or agency to notify the contractor to
proceed with the contract. ”

“ Even in the domain of contract, we find the striking doctrine that an undisclosed principal has the rights as well as the obligations of a known contractor,—that he can be sued, and, more remarkable, can sue on his agent's contract. The first precedent cited for the proposition that a promise to an agent may be laid as a promise to the principal, is a case of master and servant. ”