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What You Need to Know to Avoid Worker Classification Issues

Employment1

Independent contractors are an increasingly popular alternative to full-time employees, as independent contractors cost much less and are less of a liability than full-time workers…or are they? While independent contractors CAN pose less of a liability, when workers are misclassified as contractors, they can actually create quite a headache for employers. If you are considering hiring independent contractors to complete work on your company’s behalf, there are some things you need to know and think about before doing so. Contact the Fort Lauderdale business litigation lawyers at the office of Edward J. Jennings, P.A. to learn more about what and what does not make an independent contractor so that you can hire smart and avoid unnecessary legal issues.

If you hired a person as an independent contractor but it turns out that you have been misclassifying them, we can help you resolve the issue and move on from it with as few repercussions as possible.

Employee Vs. Independent Contractor 

According to Florida Statute 440.02, an “employee” is a person who receives compensation for performance under an employment contract or any means of express or implied, written or oral agreement. An officer of a corporation can be an employee unless he or she expresses a wish to be exempt from this category.

An “independent contractor,” on the other hand, is someone who meets at least four of the following criteria (unless a person is an independent contractor in the construction industry, in which case he or she is technically considered an employee of the general manager or company unless a contract exists that expresses otherwise):

  • The person owns a business that maintains its own separate work facility, equipment, materials, vehicle, and other accommodations;
  • The person possesses a federal employer identification number, unless he or she is a sole proprietor and is not required to do so;
  • The person receives compensation that is paid to the business and not the individual;
  • The person holds a bank account in the name of the business entity for the purpose of paying for business expenses;
  • The person is able to perform work for any person or entity in addition to performing work for you without having to complete a job application; and/or
  • The person receives compensation on a bid basis or upon completion of assignments as outlined in the independent contractor agreement.

If a person does not meet four of the above requirements, he or she may still be classified as an independent contractor. Review the statute for additional exemption criteria.

Six-Part Test for Classifying Employees 

When trying to determine whether or not a worker is an independent contractor, there are a few different tests that you can perform. Each test applies to different agencies, but this six-part test encompasses them all, making it the most effective way of determining a worker’s status:

  1. Is the worker an integral part of your business?
  2. Does the worker the worker’s managerial skill affect his or her opportunity for profit or loss?
  3. Does the work performed by the person require a unique set of skills and initiative?
  4. How does the worker’s relative investment compare to that of your investment?
  5. Is the relationship between the worker and employer permanent or indefinite?
  6. What is the nature and degree of the worker’s control?

Your answer to this last question is probably the most important, as independent contractors should be able to choose which work they will and will not perform, how they want to perform it, how much they should get paid for doing it, and what hours they work.

Consult a Fort Lauderdale Business Litigation Attorney 

If you have doubts about a worker’s status, or if you are thinking about hiring an independent contractor, call the law offices of Edward J. Jennings, P.A. Our Fort Lauderdale business litigation lawyers can help you review the law and perform the six-part test to come up with a definitive and accurate classification.

Resource:

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0440/Sections/0440.02.html

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