The Anti-Kickback Employee Safe Harbor: An Overused, Often False Sense of Security

The bona fide employee anti-kickback safe harbor excepts from its reach “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services.”

Under this statute, an employee is any worker that satisfies the common law rules for establishing employer-employee relationship. Some of the factors for determining common law employees include employer control, supervision and training of the employee.

In addition, the courts have held that substance is more important than form, and the following factors should be considered when analyzing whether an individual or entity qualifies under the bona fide employee anti-kickback safe harbor:

• • The hiring party’s right to control the manner and means by which the product is accomplished
  • The skill required
  • The source of the instrumentalities and tools
  • The location of the work
  • The duration of the relationship between the parties
  • Whether the hiring party has the right to assign additional projects to the hired party
  • The extent of the hired party’s discretion over when and how long to work
  • The method of payment
  • The hired party’s role in hiring and paying assistants
  • Whether the work is part of the regular business of the hiring party
  • Whether the hiring party is in business
  • The provision of employee benefits
  • The tax treatment of the hired party
  • Finally, no one factor is determinative; “all of the incidents of the relationship must be assessed and weighed.”