September 26, 2007
Restatement (Third) of Agency: "Independent Contractors"
Posted by Gordon Smith

If you follow developments in agency law at all, you know that the Restatement (Third) of Agency eliminated "servants." Courts and commentators have been calling them "employees" for years, anyway, so that change seemed inevitable. But did you know that the Restatement (Third) of Agency also eliminated "independent contractors"? Here is the explanation:

The common term "independent contractor" is equivocal in meaning and confusing in usage because some termed "independent contractors" are agents while others are nonagent service providers. The antonym of "independent contractor" is also equivocal because one who is not an independent contractor may be an employee or a nonagent service provider.

All of this seems right to me, but what are we supposed to call people who aren't employees?

Did you guess "nonemployees"? That seems perfectly reasonable, until you consider that "nonemployees" doesn't correct the fundamental problem with "independent contractors," namely, that within this group are both agents and nonagents.

To cure this ambiguity, the drafters of the Restatement (Third) of Agency opted for two terms: "nonemployee agents" and "nonagents." Simple.

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