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Am I an Independent Contractor or an Employee? And Can I Choose?

Employment2

Many people who work in Florida, want to know if they are classified as independent contractors or employees. This is especially true for those who perform contracting work, are paid commission-only, or get paid through their own company (like an LLC), For instance, if you do part-time editing work for a local company, or if you are a driver for a car service, what is your proper classification? Can you choose? In short, the answer is no: individuals (or their employers) cannot “choose” whether they are an independent contractor or employee. Instead, we have to look at factors established under the law to determine the proper classification, which includes the nature of the work you do. In Florida, the intentional misclassification of a worker is a felony. It is important to understand the distinction between an independent contractor and an employee, and how your status impact the responsibilities of the employer, and your rights as a worker.

Learning the Difference Between an Independent Contractor and an Employee

Why does it matter if you are classified as an independent contractor or an employee anyway? Internal Revenue Service (IRS) explains thatbusiness owners are required to withhold income taxes for employees, but not for independent contractors. That is not the only difference, however.

Employee may also be entitled to certain benefits (like social security and workers’ compensation) paid by the employer, and if an employee gets hurt on the job, he or she generally can file a claim for workers’ compensation benefits. Similarly, employees can typically recover unemployment benefits if they are terminated from a position through no fault of their own, when independent contractors cannot. Employees may also be covered under wage and hour laws (including overtime requirements) in addition to anti-discrimination claims, which may not apply to independent contractors.

Factors for Determining Your Classification as a Worker

When it comes to making this classification, there are certain federal and state factors that must be considered. In terms of federal factors, the IRS explains a worker’s classification is based on two questions: 1.) what is the employer’s degree of control over the worker and 2.) how much independence does the worker have? These questions generally can be answered by looking at three different categories:

  • Behavior of the employer and the worker (such as whether the employer can control what the worker is doing, and how and when the worker does his or her job);
  • Financial matters (such as whether the employee can have expenses reimbursed by the employer, or whether the employer provides the tools the employee needs to do the job); and
  • Type of relationship between the employer and the worker (such as whether the employer provides benefits, or whether there is a written employment contract).

In general, the more control the employer has over the worker and the more reliance the worker has on the employer (and the less the worker is independent), the more likely that the worker is an employee. When a worker is more independent and in less control by the employer, the more likely the worker is an independent contractor.

For workers in Florida, the Florida Department of Revenue looks to 10 factors to determine status. One factor is not determinative of status, but rather, we look to the evaluation of factors as a whole. The 10 factors are as follows:

  • Extent to which the employer or business can exercise control over the worker’s work (such as how the work is done and when it is done);
  • Extent to which the worker is engaged in a distinct occupation (the more distinctive, the more likely the worker is an independent contractor);
  • Extent to which the work being done is conducted with or without supervision from the employer (less supervision points toward the likelihood of an independent contractor classification);
  • Level of skill required in the work or occupation (the more skill required, the greater the likelihood of an independent contractor classification);
  • Extent to which the employer supplies the equipment, materials, tools, vehicle, and/or physical space necessary to do the work (when the employer provides many of these things, the worker may look more like an employee);
  • Length of time the worker is employed (longer term, continuous, and exclusive employment looks more like an employee classification than an independent contractor classification);
  • Method of payment (when a worker is paid for the job done, rather than the time it takes to do the work, then the worker is more likely an independent contractor);
  • Extent to which the work is part of the employer’s regular business (if a worker provides services essential or integral to the business, she or he is more likely to be an employee);
  • Whether employer and worker believe they have an employer-employee relationship; and
  • Whether employer is or is not in business (if the employer is an individual, and not a business, it is more likely that the worker is an independent contractor).

Contact a Florida Employment Law Attorney

These classifications can be complicated and should be determined on a case-by-case basis. If you have questions about whether you have been properly classified, or if you are a business owner making determinations about proper classifications, a Florida employment lawyer can help. Contact Scott Wagner and Associates, P.A. today.

Resources:

irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

dol.gov/whd/workers/misclassification/

dol.gov/featured/misclassification/

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Florida 561-653-0008 California 213-377-5200
* Cathleen Scott is licensed to practice in Florida only.

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