Morris Law Center
When should an independent contractor become an employee?
Effective June 2, 2015, S.B. 224 provides that a person is conclusively presumed to be an independent contractor for purposes of NRS Chapter 608 if:
The person is not a foreign national who is legally present in the United States;
The person is required by contract with the principal to hold any necessary state or local business license and to maintain any necessary occupational license, insurance or bonding; and
The person meets 3 or more of the following criteria:
The person has control and discretion over the means and manner of the performance of any work and the result of the work.
The person has control over the time the work is performed.
The person, with limited exceptions, is not required to work exclusively for the principal.
The person is free to hire employees to assist with the work.
The person contributes a substantial investment of capital in the business of the person.
Moreover, even if a person is not conclusively presumed to be an independent contractor for failure to satisfy three or more of the criteria set forth in section (c) above, that does not automatically create a presumption that the person is an employee. The test if there is not a presumption:
In Terry v. Sapphire Gentlemen’s Club, the Nevada Supreme Court officially adopted the Economic Realities Test to determine under Nevada’s wage and hour statutes whether someone is an employee or an independent contractor. The test examines various factors:
The degree to which the person’s work is controlled by the organization;
The individual’s investment in facilities and equipment, if any;
The individual’s opportunities for profit or loss, if any;
The amount of any initiative, judgment, or foresight the person uses in open-market competition;
The permanency of the relationship; and
Whether and to what extent the individual’s work is an integral part of the organization’s business or activities.
No one factor is determinative, but the DOL typically finds an employment relationship, rather than a true independent contractor relationship.
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