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In light of the recent State of Michigan Attorney General Opinion No. 7285, many townships have asked whether a building official must be hired as an employee. The answer is not a simple yes or no. Michigan Attorney General Opinions are only persuasive authority in court, not binding. So if a township is challenged in court for erroneously classifying a building official as an independent contractor, a court will not find for certain that the township has misclassified its building official merely because of the opinion. A court will apply the same analysis and review the same statutes in the Attorney General’s opinion based on the specific characteristics of the relationship the building official and the township have.
The key for any determination as to whether an individual is an employee or an independent contractor is the “economic realities test” used in Michigan. This test is applied by most courts to determine the classification of an individual working for the township, which means that the statutory sections reviewed by the Attorney General may not be conclusive and are also open to interpretation. There is a list of factors, including the township’s “(1) control of a worker’s duties; (2) payment of wages; (3) right to hire, fire, and discipline; and (4) performance of the duties as an integral part of the employer’s business toward achieving a common goal.” The application of these factors will determine whether any specific building official hired by a township is an employee or an independent contractor.
Ultimately, the Attorney General Opinion highlights the complexity with identifying building officials as employees or independent contractors. In light of the opinion, any township currently contracting with a building official should review that relationship and come to consensus as to whether changes should be made to the relationship. It may be appropriate in some instances to reclassify the individual as an employee, but the answer is specific to each case.
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At Fahey Schultz Burzych Rhodes PLC, we’ve been helping municipalities, franchised businesses, employers, and more with their legal needs since 2008. We’d love to learn how we can help you, too.