New Affidavit of Exempt Status Forms
The issue of whether a person or entity is an employee or an independent contractor is a complicated one. Every law seems has its own definition (and companies should be mindful to review these definitions on a regular basis).
In August 2018, the Workers' Compensation Commission issued its new CC-Form-36A: Affidavit of Exempt Status under the Administrative Workers' Compensation Act and its CC-Form-36C: Cancellation of Affidavit of Exempt Status.
The Affidavit of Exempt Status is a two-page document, and the independent contractor must complete and sign both pages. The second page includes an 11-part checklist to aid in determining whether the person is or is not an independent contractor under that law. You will note the form advises "[i]f the greater weight of the statements [ ] do not describe your business, you should not sign the attached Affidavit ...". In other words, there is no single factor which controls.
The Affidavit of Exempt Status which the proposed independent contractor must complete includes questions such as whether the company exercises very little control over his work; whether he is engaged in business for others; whether the company does not supply the things needed to perform his job; whether the work he does is not the regular business of the company; and whether he has the right to terminate the relationship without any liability.
Just because a person has incorporated (created a subchapter S corporation or an LLC) does not automatically transform that person into an independent contractor. That is but one factor. Just because there is a written contract will not alone transform that person into an independent contractor. This Affidavit of Exempt Status (like most laws) reflects a more holistic approach to the question. Independent contractors and companies alike must be aware of this area of the law in order to avoid the myriad of problems which can arise from misclassifying a worker.
With the new forms, now is a good time for companies to re-assess any persons/entities which may have been classified as independent contractors, under this and other laws.
By Kristen L. Brightmire, email@example.com