Please see response attached for active links (also presented below). I hope this helps and take care.

RESPONSE:

1) Is Mary an independent contractor or an employee? Describe the factors that led to your determination.

There are several criteria to determine if Mary is a contractor or an employee. For example, one critical to distinguish an independent contractor from an employee is the degree of control over how the work is accomplished. Initially Mary had more control than she did at the end. This could mean that she had moved from being an independent contractor at the beginning to an employee over time. However, there are many factors to consider in making a determination as to whether a worker is an independent contractor or an employee. Let's look at some of them, while considering Mary's scenario above:

(1) Whether a distinct occupation or business is being performed (e.g. Mary is a programmer, so Mary was contracted as an independent contractor for a specific project).

(2) The amount of supervision over the means by which the work is performed; the more supervision, the more likely the person is considered an employee versus an independent contractor (e.g. "the supervisor begins working more closely with Mary and requires her to use company materials and equipment while adhering to company work schedules" implies a move away from independent contractor towards an "at will" employee).

(3) the degree of skill required to perform the work; (e.g., "programmer" "equally-qualified cousin" implies independent contractor)

(4) who provides the tools used to perform the work, and (e.g., "required her to use company materials and equipment while adhering to company work schedules" implies an "at-will" employee)

(5) the place where the work is done; (e.g. Mary is working in the office, "the supervisor begins working more closely with Mary and requires her to use company materials and equipment while adhering to company work schedules" suggesting an "at-will" employee position).

(6) The ability of the person performing the work to work for others at the same time (e.g. although not stated specifically, it sounds like Mary is working ONLY for this company as "Mary is asked to leave" and later the supervisor does "not offer Mary the opportunity to return").

(7) the ability to terminate work in progress without affecting the basis of payment for the work performed (that is, whether the person performing the work can end the project and still get paid by the purchaser of the service); (e.g., the scenario does not mention pay).

(8) Who determines when the work is to be performed (regular hours vs. self-scheduled hours); (e.g., Mary was required "to use company materials and equipment while adhering to company work schedules" suggesting employee status)

(9) the basis of payment (payment by the hour, day, week, or month during which the services are performed, or payment only for actual work completed) (e.g., the basis of payment is not mentioned for Mary, but she was adhering to the company work schedule for nearly two years).

(10) The basis upon which termination of the agreement can be made (as stated in the contract, e.g., independent contractor; the scenario says that Mary was asked to stay on for the new project, but does not mention entering into another contract)

(11) The length of time during which the services will be performed; the longer the time, the more likely the person is considered an employee versus independent contractor (e.g. Mary worked there "two years" and was working closely with a supervisor, using the company materials, following the work schedule, and was terminated at will).

Whether a worker would be found to be an independent contractor or an employee rests upon weighing the above relative factors. Purchasers of services performed by others must be careful since an incorrect classification of a person as an independent contractor or an employee can result in penalties being assessed against the employer. If a purchaser of services is deemed to be an "employer" (and thus the "independent contractor" deemed to be an "employee"), the employer maintains responsibility for the payment of taxes, insurance and benefits for that employee (http://employment-law.freeadvice.com/employee_contractor.htm).

However, there is no employer-employee relationship between an independent contractor (Mary initially entered into contract) and the person or entity that purchases his/her services. The independent contractor controls the means by which the work is performed, while the purchaser of the services retains control over the result of the work (http://employment-law.freeadvice.com/independent_employee.htm).

Click here for an informative article on company policies regarding employees and contractor.

2) Has the employer/employee relationship changed over the course of time? If so, how?

The relationship changed over time. Initially, Mary was hired as an independent contractor because "Little Lamb Company need[ed] an additional programmer for a special project" and Mary entered into a contract with the company. However, Mary was later asked to stay on and began working close to the supervisor, who expected Mary to use the company materials and equipment, to follow the company work schedule, and was terminated at will when economic conditions demanded. Thus, Mary seemed to move from an independent contractor to an "at-will" employee. What do you think?

3) Was Mary's release legal under the doctrine of employment-at-will? Why or why not?

If Mary had moved into an "at will" employee, then the doctrine of employment-at-will allows her employee to let her go without reason; thus, it is legal.

In the scenario, it says Mary enters into a contract for the first project, however, makes no mention of a contract when she is asked to stay on (however, sometimes contracts are implied). For example, in most states of the United States all employees are considered "at will" employees. That means that the employer can terminate or change the employment relationship "at will", unless there is a contract with the employer. In general, an employer can fire an "at will" employee, or change the employee's position or compensation with no notice and no reason. Likewise, the employee can terminate his employment "at will" without notice or reason. However, there are three possible legitimated reasons employee can challenge a wrongful termination:

a. If an employee has been fired without a good reason (e.g. Economic reasons are a good reason to be fired or let go?)

b. If an employee has been fired in violation of federal or state laws (e. g, discrimination) (e.g. This does not apply to Mary, at least form the information given in the scenario).

c. Firing a "for-cause" employee without a legitimate reason can be challenged on several fronts (e.g. Mary is not considered "for-cause" employee, so this does not apply). http://employment-law.freeadvice.com/firing/action_wrongful_termination.htm).

Let's go through the following three exceptions to aid understanding.

If not, which of the following exceptions to employment-at-will have been violated? Why?

a) Breach of public policy Values, principles and basic rules that the courts and legislatures consider to be in the best interest of individuals and the general public. Employer violations of specific labor and employment laws might be called violations of public policy, instead of or in addition to violations of the specific laws. That's because it's in the best interest of all workers that all employers obey such laws. Public policy may be written or implied, and varies among states and municipalities. Consequently, whether or not an employer has violated public policy is often a matter of interpretation by a court or arbitrator (i.e., hired cousin instead of having Mary return).

b) Breach of implied covenant of good faith and fair dealing:

The scenario suggests that Mary had moved to an employee status. In general, in each contract, there is an implied covenant of good faith and fair dealing. The purpose of the implied covenant is to allow for the terms of contracts to be interpreted fairly. Consequently, what constitutes a breach of the covenant depends on the particular terms of the contract. If A contracts with B to perform when the clock strikes at noon, the implied covenant of good faith would impose liability if A destroyed the clock to avoid having to meet the precise terms of the contract. We do not really have this information available for Mary i.e. of what was in her initial contract. This might have applied to Mary if she was still considered an independent contractor and not an 'at-will' employee.

While the covenant is in essence an implied contract term, occasionally courts have held that the breach of the implied covenant of good faith and fair dealing can also constitute a tort. This allows for tort damages as well as contract damages. Tort damages can include, in addition to consequential economic loss, mental distress and punitive damages, where malice is proven. Such tort damages can far exceed ordinary contract damages. While contract remedies recognize that a breach may in fact be economically efficient and are therefore not intended to be punitive, the extensive potential tort damages are a response to what is viewed, at the least, as a serious private wrong (see http://www2.tltc.ttu.edu/Cochran/Cases%20&%20Readings/Business%20Torts/good_faith__fair_dealing.htm).

c) Breach of implied contract. Why?

For example, in an increasing number of cases, courts are finding there is a "contract" between the employer and the employee, even in the absence of a formal written employment agreement. Mary could have a case. For example, language in an employee handbook may promise "all layoffs are based on seniority" or "we give employees at least 2 weeks notice of all layoffs". Therefore, if Mary thinks she is wrongfully terminated, she could challenge a wrongful termination for these legitimate reasons (http://employment-law.freeadvice.com/firing/no_fire.htm).

FINAL REMARK I HOPE THIS HELPS AND TAKE CARE.