Federal Circuit clarifies difference between services and independent contractors in Burke v. HHS

The Burke v. HHS case reaffirms that distinguishing between services contractors (akin to employees) and independent contractors rests heavily on the level of government supervision. Burke, an independent contractor with NIH, argued he should have been classified as a personal services contractor and compensated similarly to an employee. However, the Federal Circuit upheld his classification as an independent contractor, underscoring that he lacked “direct and continuous” government supervision—a critical factor under the Federal Acquisition Regulation (FAR) for defining a services contract.

For federal contractors and program managers, this ruling highlights that even if contractors work on-site, use government equipment, or integrate into agency projects, they remain independent contractors if they operate without daily supervision. Agencies should take note: supervising contractors too closely may inadvertently shift their status to a personal services contract, bringing different compensation and employment obligations.