['Contingent Workforce']
['Independent Contractors']
06/14/2024
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Delaware law defines both employee and independent contractor.
Employee: A person suffered or permitted to work by an employer in the State. Delaware wage law does not apply to any of the following:
- Employees of the United States government.
- Employees of the State of Delaware or any political subdivision of this State.
- Independent contractors.
Independent contractor: An individual or entity who meets all the following criteria:
- Performs the work free from the employer’s control and direction over the performance of the employee’s services.
- Is customarily engaged in an independently established trade, occupation, profession, or business.
- Performs work which is either of the following:
- Outside of the usual course of business of the employer for whom the work is performed.
- Performed by a registered contractor under Title 19, Chapter 36 outside of any place of business of the employer for whom the work is performed (note that this applies to construction service contractors).
Delaware law also defines “exempt person” with a result similar to what is established with the FLSA’s economic reality test:
Exempt person: any individual who:
- Performs services in a personal capacity and who employs no individuals other than a spouse, child, or immediate family member of the individual;
- Performs services free from direction and control over the means and manner of providing the services, subject only to the right of the person or entity for whom services are provided to specify the desired result;
- Furnishes the tools and equipment necessary to provide the services; and
- Operates a business that is considered inseparable from the individual for purposes of taxes, profits, and liabilities, in which the individual:
- Owns all the assets and profits of the business; and
- Has sole, unlimited, personal liability for all the debts and liabilities of the business; or alternatively, if the business is organized as a single-person corporate entity, to which sole, unlimited personal liability does not apply, the individual must be the sole member of said single-person corporate entity; and
- For which the individual does not pay taxes for the business separately but reports business income on the individual’s personal income tax return; and
- Exercises complete control over the management and operations of the business.
Delaware law further stipulates that employers may not misclassify a worker as an independent contractor for purposes of avoiding wage, tax, or workers’ compensation obligations.
Related information
Citations
- 19 Del. Ch. 1101
- 19 Del. Ch. 3501
- Part 795 — Employee or independent contractor classification under the Fair Labor Standards Act
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