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New Laws Define Independent Contractor Status in Arizona

Effective on August 6, 2016, Arizona law on employment relationships will allow employers contracting with an independent contractor to prove the existence of such a relationship by having the independent contractor sign a declaration. Under the new law, the execution of a declaration creates a rebuttable presumption that an independent contractor relationship exists.

The law provides sample language for the declaration, including the following:

  1. acknowledgement that the contracting party does not restrict the contractor’s ability to perform services for or through other parties,

  2. expectation that the contractor provides services for other parties, and the employer does not dictate the performance, methods, or process the contractor uses to perform services, and

  3. acknowledgement that the independent contractor is paid by the job and not on a salary or hourly basis, and is not covered by the employer’s health or worker’s compensation insurance.

An employer’s use of a declaration is entirely optional, but there appears to be no meaningful disadvantage to doing so. The absence of such a declaration does not raise a presumption that an independent contractor relationship does not exist.

The new Arizona law also provides that any supervision or control exercised by the employing organization to comply with federal or state law cannot be considered for the purposes of determining whether a worker is an independent contractor or an employee. This includes efforts to comply with any licensing requirements or professional or ethical standards.

Another new law classifies as independent contractors individuals or entities using aqualified marketplace platform’s digital platform to provide services to third-party individuals. Under the new statute, the qualified marketplace contractor has independent contractor status if payment for services includes substantially all of the services performed and there is a written contract in effect between the parties. The written contract must provide:

  1. that the contractor is providing services as an independent contractor and not as an employee;

  2. that any payment to the contractor is for services rendered;

  3. that the contract may require work during the work hours/schedule set by the contractor;

  4. that the contract does not restrict the contractor’s ability to perform services for other parties;

  5. that the contractor pays substantially all expenses related to the services;

  6. that the contractor is responsible for payment of all income-related taxes; and

  7. that either party may terminate the contract at any time, with reasonable notice.

While these further define independent contractor status in Arizona, federal law is unaffected. The new laws do not otherwise effect any investigatory or enforcement authority related to the determination of independent contractor or employment status of any relationship.

Jackson Lewis P.C. © 2017

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About this Author

Jeffrey A. Bernick, Employer's Lawyer, Employment Attorney, Jackson Lewis, Law Firm
Principal

Jeffrey A. Bernick is a Principal in the Phoenix, Arizona, office of Jackson Lewis P.C. For the last 25 years, he has represented employers in federal and state courts and before administrative agencies on a variety of litigation matters.

Mr. Bernick advises both private and public employers on day-to-day issues affecting the workplace, including employee discipline and discharge, wage and hour issues, workplace privacy, internal investigations, employee handbooks/manuals, employment and confidentiality agreements, medical...

602-714-7070
Monica M. Ryden, Employment Law Litigator, Jackson Lewis Law Firm
Of Counsel

Monica Ryden is Of Counsel in the Phoenix, Arizona, office of Jackson Lewis P.C. She has more than 10 years of experience litigating employment matters in state and federal courts.

Ms. Ryden advises and represents employers in a broad range of employment law matters, including those involving discrimination and harassment, wage and hour, negligent hiring, wrongful termination, and retaliation claims. She also litigates non-compete, non-solicitation and trade secrets misappropriation disputes.

Ms. Ryden advises and trains managers and supervisors on preventive litigation practices, focusing on how to comply with applicable laws and regulations, avoid workplace disputes, and resolve employee relations problems, including workplace violence. She also advises employers on personnel policies and handbooks.

602-714-7072