Indiana: State Supreme Court Sheds Light on Independent Contractor Test for On-Demand Services

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January 23, 2019

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In Q.D.-A, Inc. v. Indiana Department of Workforce Development, the Indiana Supreme Court examined whether or not a large vehicle transportation driver qualified as an independent contractor.  Q.D.-A is a transportation matching service that coordinates independent drivers with manufacturers in order to transport large recreational or non-towable vehicles. Q.D.-A required the driver to attend a two-day training orientation on federal regulations and complete a driving test, but the driver was otherwise able to refuse jobs, work with other competitors, and negotiate his own pay.

The Indiana Supreme Court evaluated whether the driver was an independent contractor under the three-prong ABC test, which reviews: (a) whether the worker is free from the employer’s control and direction; (b) whether the worker performs services outside of the employer’s usual business; and (c) whether the worker receives a commission independently operates their own trade, occupation, or profession. The Court stated that the driver was an independent contractor because he had total control over how “and even if” he completed his assigned work.  The driver had the freedom to refuse jobs, work with other competitors, and negotiate his own pay.  The requirement to undergo initial training and take a driving test did not constitute the employer’s control and direction over the driver’s work.  The court also rejected the argument that the employer and driver shared the same core business, stating that Q.D.-A’s primary business was transportation arrangement, whereas the worker’s business was the driving service.

The court supporting the idea that “middlemen” provide a different service than those offered by the contractors, may provide clarify for other on-demand businesses who facilitate third parties to provide services.

Action Items

  1. Have independent contractor relationships reviewed by legal counsel for compliance.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2019 ManagEase

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