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Independent contractor
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An independent contractor is a natural person, business or corporation which provides goods or services to another entity under terms specified in a contractor within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when required, during which time she or he may be subject to the Law of Agency. Contractors often work through a limited company which they themselves own, or may work through an umbrella company.
The employer of an independent contractor is generally not held vicariously liable for the tortious acts and omissions of the contractor, because the control and supervision found in an employer-employee or Principal-Agent relationship is lacking. However, vicarious liability will be imposed in three circumstances:
- where the contractor injures an invitee to the real property of the employer,
- the contractor is involved in an ultra-hazardous activity (one likely to cause substantial injury, such as blasting with explosives), or
- the employer is estopped from denying liability because he has held out the independent contractor as if he were simply an employee or agent.
See also: IRS Reclassification