Labor & Employment Law

Blackwater May Mean Deepwater: Independent Contractor Controversy Erupts

By Mark E. Tabakman, Esq.

We all know Blackwater as the company that has been given one billion dollars in federal contracts to do work in Iraq.  There have already been numerous allegations concerning the activities of Blackwater agents and their tactics.  Now, it appears that this company may have, on a widespread scale, been violating labor law by classifying individuals as independent contractors when they should have been deemed employees.

Blackwater classified its security guards as independent contractors.  As they were not deemed employees by the company, the company was able to qualify for small business contracts without competing with other qualified bidders.  This is the essence of the allegation made by Congressman Henry Waxman (D-Calif).  The company claimed that it did not sufficiently control the activities of the guards in Iraq and Afghanistan for them to be labeled employees.  Not only does this contradict what a Blackwater lawyer had argued in a wrongful death case, when he was seeking money damages for their estates, it also strikes me as a position without foundation.

In order to establish the element of "control," which then shows someone is an employee, it is not necessary for the putative employer to control every aspect of the individual's work day.  It is enough if a general umbrella of control, actual or potential, exists over the employee(s).  It appears to me, based on the little that is now public, that Blackwater did exercise sufficient general control over these people and its claim that "all" that it did was to pay them seems bland.

At stake are millions of dollars in taxes to the IRS and probably millions of dollars in overtime monies to the employees.  It is very tough to establish a true independent contractor relationship and the framework of these relationships seems to be the antithesis of such a relationship.

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Full post as published by Wage & Hour - Development & Highlights on March 11, 2008 (boomark / email).