A deeply divided Connecticut Supreme Court recently issued a long-awaited decision, Standard Oil v. Administrator, regarding who is an independent contractor. The reason this is significant is that companies that utilize the services of independent contractors are not responsible for, among other taxes, unemployment compensation contributions. The Board of Review of the Employment Security Appeals Division has long interpreted the statute liberally and in this case concluded that the first two prongs of the “ABC” test required that the workers be treated as employees. The Connecticut Supreme Court overturned that ruling, finding that the workers were indeed independent contractors.
The ABC test requires a company seeking an exemption from the tax to meet all aspects of the statute. Part A focuses on the company’s direction and control over the workers. Part B looks at whether the work was performed at the company’s place of business or whether the work performed is integral to the company’s business. Part C, which was not at issue in the case, is focused on whether during and after providing services to the company, the independent contractor held himself out as offering the same services to others and has continued in the business of providing the same services.Continue Reading The Test for Independent Contractors and Unemployment Taxes Made Friendlier