Jacksonville Independent Contractor Attorneys
Proven Labor & Employment Lawyers in Duval County
When a company considers using independent contractors instead of employees, they need to be careful. The company must make sure that the independent contractor truly is a contractor and does not fall under an employee definition. In this situation, federal, state, and local law apply.
Just because a company and an independent contract sign a contract that calls the person an independent contractor and outlines their relationship, the Department of Labor (DOL), the Internal Revenue Service (IRS), state and local agencies, and courts will look to see what the actual working relationship is between the company and the person. They may decide that the person is really an employee and not an independent contractor.
The decision on if a person is an independent contractor is fact-specific and is different in every situation. Many times, the question to be answered is: How much control does a company have over the person performing the services?
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Determining if a Worker is an Independent Contractor or an Employee
There is not one test that can help evaluate the relationship for the purpose of compliance. Different tests are applied depending on who is making the determination. For example, DOL and federal courts use the economic realities test to determine if the person is truly an independent contractor under the Fair Labor Standards Act (FLSA) (see Bartels v. Birmingham, 332 U.S. 126, 130 (1947); Keller v. Miri Microsystems LLC, 781 F.3d 799 (6th Cir. 2015)); Marin v. Travelers Ins. Co., 771 So. 2d 625, 626 (Fla. 3rd DCA 2000)).
So, what does this test look at? It looks at six things:
- The degree of control
- The relative investment in facilities
- The worker’s opportunity for profit and loss
- The permanency of the parties’ relationship
- The skill required for the work
- Whether the worker’s services are integral to the company’s business
(United States v. Silk, 331 U.S. 704, 717-19 (1947); DOL Fact Sheet #13: Employment Relationship Under the FLSA)
Just evaluating one of these factors is not enough.
The DOL has also specifically noted that time or mode of pay does not make the person an independent contractor, and further has explained what will not be taken into consideration:
- The place where work is performed
- The absence of a formal employment agreement
- Whether the worker is licensed by a state or local government
The IRS asks a different question when making a determination on if a person is truly an independent contractor: Does the company have the right to control or direct only the result of the work, and not the means and methods of accomplishing the result?
Here, three categories are important:
- Behavioral control (Does the company control the way in which work is performed?)
- Financial control (Does the company control the economic aspects of the contractor’s activities?)
- The relationship between the parties
Florida has its own text, and there are several Florida statutes that apply.
Costs of Independent Contractor Misclassification
What if your independent contractor is found to be an employee? The risks include the following:
- Back pay, including unpaid minimum wage and overtime compensation
- The value of employee benefits
- Unpaid taxes and contributions
- Penalties and interest
What About Florida?
In Florida, there is no such thing as unintentional misclassification (which exists under the DOL and IRS).
Under Florida’s workers’ compensation laws, if a contractor was really an employee, the employer may be fined $5,000 for each misclassified employee (§ 440.107(7)(f), Fla. Stat.).
Under Florida law, the person (contractor/employee) could file a lawsuit and may recover attorneys’ fees and costs (§ 448.08, Fla. Stat.).
For guidance on your case, contact us online or call (904) 615-8950 today.
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