In youth sports, many coaches and referees are unpaid volunteers—often times parents sacrificing evenings or weekends to help their kids develop a passion for sports. But sometimes coaches and referees are workers paid by associations. In these cases, it is important for the associations to accurately determine whether the workers should be classified as employees or independent contractors.
On one hand, incorrectly classifying workers as independent contractors could expose associations to unpleasant surprises such as (a) lawsuits brought by a single worker or a group of them, (b) facing large bills for unpaid payroll taxes, or (c) facing steep penalties for failing to provide workers’ compensation or unemployment insurance. In addition to monetary considerations, associations that improperly classify workers as independent contractors may face reputational harm that makes recruiting talented coaches or referees an uphill battle.
On the other hand, incorrectly classifying workers as employees—when they could lawfully be deemed independent contractors—means associations will pay more to maintain their workforce and be subject to additional legal and regulatory burdens.
So how can associations make sure they are properly classifying their workers? Unfortunately, there is no straightforward answer. Whether a worker is an employee or an independent contractor largely depends on the degree of control the association exerts over the worker: the more control the association exerts, the greater the likelihood that the worker should be classified as an employee. The difficulty is that there is no clear definition of control— no bright line, so to speak—that indicates whether they should classify a coach or referee as an employee. The law uses an ambiguous “balancing test,” which weighs many variables to arrive at the proper designation.
The variables courts most frequently examine to determine whether someone is an employee, or an independent contractor are as follows:
Does the association supplies the tools that allow the coach/referee to complete the task?
Does the association provide transportation, meals, uniforms, mobile or computing devices, cell phones, etc.?
Does the association control the coach’s/referee’s schedule?
Does the association require the person to show up at a specific time prior to the game? Is the person required to attend meetings set on the basis of others’ schedules? Does the association select the games in which the coach/referee will participate?
Does the association train their coaches or referees?
Does the association send the worker to conferences? Does it provide the worker with materials to remain current on new developments?
Does the association control where the coach or referee works?
Of course, this does not mean that a coach or referee can choose not to show up to a game. Rather, in this case, this variable will look at whether the association requires the worker to show up to meetings at a specific place.
How closely does the association controls the individual’s work? (standards, nature of the product, etc.)
Does the association implement comprehensive performance review procedures? Does anyone at the association otherwise provide feedback to the worker based on performance? Does the association have any performance-based compensation such as a bonus? Does the association tightly control the worker’s performance by means of rules and guidelines or does the worker exercise a lot of authority? For example, is a coach required to use a specific formation, rely on specific plays, give every player time off the bench?
How permanent is the working relationship? To what degree does the coach/referee rely on work from the association for his or her economic sustenance?
How long was the coach/referee working for the association? Does the worker derive most of his or her income from this work?
Does the coach or referee have the ability to control compensation or opportunities to make a profit?
Does the association negotiate the pay rate with the coach/referee? Alternatively, does the association offer a non-negotiable rate?
Because it considers so many facets of the working relationship, the balancing test may seem daunting. But the absence of a clear definition, has one significant upside: associations have considerable latitude. Associations can solidify variables that are most important to them and compromise on the others knowing that, as a whole, the scales will tip toward independent contractor status.
Overall, whether employee or independent contractor, a coach/referee that is plainly misclassified is simply an invitation for trouble and unnecessary costs. For closer cases, where some variables point to independent contractor status while others counsel employee status, the right decision for the association will depend on risk tolerance.