24/04/2025
OPINION:
Web developers/programmers ("devs") or similar workers can be considered as employees despite signing an independent contractor agreement or a freelancer contract and designated as "freelancers" or "contractors" if the employer/client has the power to control the means and methods by which the devs performs their work.
It is a prevalent scheme in today's age of technology that workers can easily perform work in a work-from-home (WFH) setup. Before the VA explosion, developers/programmers were the one of the first positions sought after for WFH services.
These WFH devs were usually labeled as "freelancers" or "independent contractors" and they will not get the benefits of being an employee: overtime pay, holiday pay, government-mandated social security, security of tenure (this generally means that the employee cannot be fired without cause), etc. However, under the law, they may be legitimate employees if their clients have control over the means and methods by which they perform work (as opposed to controlling only the results). Control is the very essential element that separates the employee from the independent contractor. It is a very thin line.
So how do we know if there is control? It is difficult to tell with certainty as the existence control is determined on a case-to-case basis, but these are the usual badges of control:
1. The employer sets the schedule
2. The worker works within the employer’s premises
3. Exclusivity (the worker cannot work for anyone else)
4. Supervision/monitoring
5. Permission required for certain activities
6. The worker has no unique skills and talents necessary to perform the work
7. The employer supplies the equipment/tools
8. The worker is paid the same as other employees
9. The employer requires regular reporting
10. The employer trains the worker
11. The employer sets out specific instructions
The more badges of control there are, the higher the chance that the worker will be considered as an employee as opposed to a freelancer. But again, there is no set formula. For example, a schedule is very common even for freelancers so it's not really a strong badge compared to setting out specific instructions.
Going back to devs.
Does the client/employer have to instruct every step the dev makes? Every line of code? Or is a general direction enough? Do the instructions have to be made hourly? Daily? We can argue all day as to the badges of control the devs' clients/employers have over their work but it would be better if we examine decided cases.
However, given the lack of Philippine jurisprudence as to the employment status of devs we will examine and analyze American cases involving CONTROL and the issue of employee vs. freelancers for devs.
CASE:
Aymes v. Bonelli 980 F.2d 857, 861 (2d Cir.1992)
In this case, Aymes was hired by Bonelli to create a series of programs called CSALIB. Bonelli directed and instructed Aymes on what he wanted with the program.
Here is an excerpt:
“In May 1980, Aymes was hired by defendant-appellee Jonathan Bonelli, the president and chief executive officer of Island, to work as a computer programmer.
### During that period, Aymes created a series of programs called ‘CSALIB’ under the general direction of Bonelli, who was not a professional computer programmer.
Aymes did most of his programming at the Island office, where he had access to Island's computer hardware. He generally worked alone, without assistants or co-workers, and enjoyed considerable autonomy in creating CSALIB. This autonomy was restricted only by Bonelli who directed and instructed Aymes on what he wanted from the program. Bonelli was not, however, sufficiently skilled to write the program himself.”
Although Aymes was found to be an independent contractor because of several other factors in accordance with American standards, the Court still ruled that Bonelli had the right to control the manner and means by which Aymes performs his work.
Excerpt:
“a. The Right to Control
The district court did not specifically address whether Aymes or Island Swimming had the right to control the manner of CSALIB's creation. Even without a specific finding, it is clear from the record that Bonelli and Island had the right to control the manner in which CSALIB was created. Aymes disputed Bonelli's purported skill at programming, but even without such knowledge Bonelli was capable of directing Aymes on CSALIB's necessary function. Aymes was not working entirely alone. He received significant input from Bonelli in programming CSALIB, and worked under programming limitations placed by Bonelli. Consequently, this factor weighs heavily in favor of finding that Aymes was an employee.”
It bears stressing that even if the hiring party Bonelli did not have much skill at programming, he was still able to control programmer Ayme’s manner in creating the program by directing Aymes on CSALIB's necessary function.
CASE:
JustMed Inc. v. Byce, 600 F.3d 1118, 1124 (9th Cir.2010)
The pronouncement of control in the Aymes case was repeated in the case of JustMed Inc. v. Byce which involved a programmer named Byce who was hired by JustMed (or Just) and was found to be an employee.
Excerpt:
“It is true, for example, that Just did not exercise much control over the manner and means by which Byce created the source code. However, this is not as important to a technology start-up as it might be to an established company. Byce was an inventive computer programmer expected to work independently. The business model and Byce's duties do not require that the project be completed in a particular manner or that Just continuously oversee Byce's work, so long as Just-Med eventually found itself with a marketable product. Moreover, Just did have some input into Byce's work on the software, even if it was given by e-mail and phone. Cf. id [Aymes, 980 F.2d]. at 862 (input from client regarding computer program's functions ‘weighs heavily in favor of finding [programmer]... an employee’).”
In JustMed, the court ruled that even with not much control over the manners and means utilized by Byce, the input JustMed provided, even if given by e-mail and phone, was already considered as control given the circumstances that the employer was just a start-up.
CASE:
Karupaiyan v. CVS Health Corporation, 19 Civ. 8814, Dist. Court, SD New York 2023
Another case that would tend to enlighten the factor of control when it comes to programmers is the case of Karupaiyan v. CVS Health Corporation the programmer Karupaiyan who was deemed to be under the control of its employer Aetna-AHM.
Excerpt:
“The first Reid factor, ‘the hiring party's right to control the manner and means by which the product is accomplished,’ is the most important. Eisenberg, 237 F.3d at 115; see also id. (advising that "the `greatest emphasis' should be placed on the first factor" (quoting Frankel v. Bally, Inc., 987 F.2d 86, 90 (2d Cir. 1993))). In analyzing this factor, "[t]he issue is the balance between the employee's judgment and the employer's control." Salamon v. Our Lady of Victory Hosp., 514 F.3d 217, 229 (2d Cir. 2008). Here, the undisputed facts favor Plaintiff. While the SOW [Statement of Work] speaks generally of Plaintiff's responsibilities related to Aetna's care management value stream (see SOW 5), the record discloses that Plaintiff's actual, day-to-day responsibilities were set by Kalyani, his supervisor and an Aetna-AHM employee. (Def. 56.1¶ 48; Pl. Dep. 83:23-24). See Eisenberg, 237 F.3d at 118 (finding that the giving of daily orders to a party weighs in favor of finding them to be an employee). Nor do Defendants offer any facts suggesting that Plaintiff exercised significant discretion in the performance of his functions, which autonomy would militate against a finding that Aetna-AHM exercised a high degree of control. This daily supervisory relationship, therefore, is exactly the type of ‘close, pervasive control’ over a worker that is the hallmark of an employment relationship. Eisenberg, 237 F.3d at 119; accord Yu v. N.Y.C. Hous. Dev. Corp., No. 07 Civ. 5541 (GBD) (MHD), 2011 WL 2326892, at *30 (S.D.N.Y. Mar. 16, 2011) (finding summary judgment inappropriate where ‘a reasonable jury could find that [defendants] had not only the prerogative to determine the objective of [plaintiff's] work ... but also the ability to define which tasks plaintiff would undertake to accomplish their goal, and how and when he would undertake them’), report and recommendation adopted, No. 07 Civ. 5541 (GBD), 2011 WL 2183181 (S.D.N.Y. June 3, 2011), aff'd, 494 F. App'x 122 (2d Cir. 2012) (summary order).”
The main reason as to how the employer Aetna-AHM was deemed to have control over programmer Karupaiyan’s means and manner of performing work is that Aetna-AHM’s employee supervised the programmer’s work daily and that this “close, pervasive control” is the hallmark of an employment relationship:
“3. Plaintiff's Work With the engagement documentation complete, Plaintiff began providing services to Aetna-AHM on or about June 17, 2019. (Def. 56.1 ¶ 46). Plaintiff reported to Aetna-AHM's offices to perform his assigned work, and worked standard business hours of approximately 9:00 a.m. to 5:00 p.m., five days a week. (Id. ¶ 47). While at work, Plaintiff was supervised by Kalyani, the Aetna-AHM project manager for the work Plaintiff was performing under the SOW, who assigned to him tasks to be completed. (Id. ¶ 48).”
Examining the analysis of control given in the cases of Aymes, JustMed, and Karupaiyan, we can derive the following factors that indicate control over the programmer’s means and method used in their performance of work. Neither of these factors involve interference in the literal act of programming/coding itself:
a. The hiring party provides general direction to the programmer and provides input into the project; and
b. The hiring party supervises the daily work of the programmer who works at a set schedule and who is assigned tasks to be completed.
What did we learn? If a dev is designated as a freelancer or independent contractor, they should be wary of the control their client has over their work because they may be misclassified as an independent contractor and deprived of their rights as an employee.
BONUS:
On January 10, 2024, the United States Department of Labor published a “Final Rule,” effective March 11, 2024, revising the Department’s guidance on how to analyze who is an employee or independent contractor under the Fair Labor Standards Act (FLSA). Hopefully, the Philippines also does this. You can read this "Final Rule" but be warned that it's 100+ pages long. That's how thorough the Americans are. We can see here similarities with how the Philippines determine control.
