Kentucky Court of Appeals Clarifies the Legal Test to be Utilized in Determining an Individual’s Status as Either an Independent-Contractor or an Employee

by Steven Lowery, Esq.

Individuals throughout Kentucky routinely choose to work as independent contractors for control over their enterprise and other advantages. But when a work dispute arises, they may decide to claim employee status to assert legal remedies otherwise unavailable to them. One such statute is the Kentucky Civil Rights Act, which expressly grants civil remedies to employees but not to independent contractors.

To assess the validity of such claims brought under Kentucky law, it is critical to determine the claimant’s status as either an independent contractor or an employee. Unfortunately, the common-law factors utilized for such a determination were not previously uniform throughout Kentucky jurisprudence.

Luckily, the Kentucky Court of Appeals has now clarified the factors to be weighed in such a determination. In Laura Pantoja v. Atomic Transport, LLC, No. 2023-CA-0959-MR, a case defended by Scott Jones, Esq. and Steven B. Lowery, Esq. of Reminger Co., the Kentucky Court of Appeals issued a twenty-nine-page opinion which definitively clarified the common-law factors necessary to determine an individual’s status as either an independent contractor or an employee. The case involved claims made by the plaintiff under the Kentucky Civil Rights Act (“KCRA”) against the federal motor carrier she had contracted to provide work for. At the trial court, summary judgment was granted in favor of the federal motor carrier, as it was determined that plaintiff was an independent contractor lacking recourse under the KCRA. Thus, the ultimate question for the Court of Appeals was whether the plaintiff was legally considered (1) an employee, which would grant her protections under the KCRA, or (2) an independent contractor, thereby unavailing her of the legal remedies promulgated in the KCRA.

Affirming the findings of the trial court, the Kentucky Court of Appeals found the plaintiff to be an independent contractor as a matter of law, thereby invaliding her claims against the motor carrier under the KCRA. In so deciding, the Court clarified the legal standard to be utilized when weighing whether a claimant is an employee or an independent contractor under Kentucky law. During appellate briefing, the litigants analyzed the plaintiff’s status by applying separate common-law tests that had been articulated in prior decisions. Against these distinct iterations of common-law factors that had been applied in previous federal and state decisions, the Court pointed back to the seminal U.S. Supreme Court case, Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989), for the standard test in such circumstances:

In determining whether a hired party is an employee under the general common law of agency, we consider the:

[1] hiring party’s right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are

[2] the skill required;

[3] the source of the instrumentalities and tools;

[4] the location of the work;

[5] the duration of the relationship between the: parties;

[6] whether the hiring party has the right to assign

additional projects to the hired party;

[7] the extent of the hired party’s discretion over when and how long to work;

[8] the method of payment;

[9] the hired party’s role in hiring and paying assistants;

[10] whether the work is part of the regular business of the hiring party;

[11] whether the hiring party is in business;

[12] the provision of employee benefits; and

[13] the tax treatment of the hired party.

Reid, 490 U.S. at 751-52. As such, the Kentucky Court of Appeals pointed to the seminal U.S. Supreme Court decision in Reid as the sole test to apply in such circumstances. Furthermore, the Court indicated that in cases where the Reid test is not sufficiently dispositive on the issue, future litigants could rely upon additional factors found within the Restatement (Second) of Agency § 220 to supplement their analysis.

The Kentucky Court of Appeals decision in Pantoja is a welcome clarification to litigants, workers, and businesses on the appropriate analysis to conduct when determining whether a claimant should be considered an employee or an independent contractor. If you have any questions about this decision and its impact on your business, please contact an attorney in Reminger's Employment Practices/Civil Rights Defense Practice Group.