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May 16, 2016

Court Holds Defining A Medical Professional As An Independent Contractor Is Not Enough To Bar A Finding Of Employee Status

Health care providers beware: Simply defining a medical professional as an “independent contractor” is not enough to prevent a finding of employee status if the organization controls the work performed.

On April 28, 2016, the Appellate Division, Third Department upheld that a health and wellness provider was liable for unemployment benefits of an individual claimant medical examiner, despite the existence of contracts that designated the individual as an independent contractor in Matter of Armbruster. The company respondent provided nurses to perform health screening and testing to employees of its corporate clients at the client’s workplace. In affirming the Unemployment Insurance Appeal Board’s decision, the Court observed where “the work of medical professionals is involved, the pertinent inquiry is whether the purported employer retained overall control over the work performed.” In somewhat of a more global statement, the Court further stated “an organization which screens the services of professionals, pays them at a set rate and then offers their services to clients exercises sufficient control to create an employment relationship.”

In applying those observations to the facts of the case, the Court noted the company “posted openings for medical examiners on its website, interviewed applicants and screened their education, license credentials and experience to ensure their qualifications and ability to perform the required medical services.” The company then scheduled service visits with its clients, determined what services were needed and then posted the clinic dates, which enabled examiners, such as the claimant, to sign up to work based upon their availability, and then paid them a set hourly rate. Moreover, the company provided all of the equipment and supplies for the clinics and reimbursed the examiners for certain travel and other expenses. What appeared to be particularly compelling was that the claimant worked as a “a lead examiner responsible for oversight of the clinic, bringing and returning supplies and equipment . . . submitting patient consent forms . . . resolving problems and reporting back to [the company] after the clinic was completed.”

The fact that examiners such as the claimant signed contracts designating them as independent contractors did not appear to be a significant factor for the Court because it found there was “substantial evidence to support the Board’s determination that Summit retained sufficient overall control over the work performed by claimant to establish that she was an employee.” As such, health care providers are cautioned that merely designating an individual as an independent contractor is simply not enough to insulate the provider from employee related claims. Providers looking to avoid such pitfalls should rather focus on finding other ways to remove control over the work performed by the individual contractor, such as: having variable rates of pay, allowing clients to select from a list of potential contractors, using third-parties for scheduling, not having a dress code and requiring contractors to use their own equipment and supplies.

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