Am I an Independent Contractor or Employee in Florida?

The employment universe has experienced rampant reinvention in the last decade or so, incorporating concepts like remote work, flex-time, “gig” opportunities, and a host of other innovations that have challenged our traditional understanding of the employment relationship. Yet, whether one is an employee or its legal opposite, an independent contractor, is a matter of ongoing significance. Perhaps you work from home, but use a laptop provided by the business you work for. Maybe you make your own schedule, but you’re expected to put in 40 hours per week and can’t realistically have other clients. Are you an employee? If you’re classified as an independent contractor, the company you perform work for is off the hook to cover minimum wage, payroll taxes, unemployment insurance, workers compensation, unemployment tax or ACA-mandated health insurance, not to mention workplace discrimination or tort liability.

Many People Are Illegally Misclassified

The IRS estimated 3.4 million workers nationally were misclassified as independent contractors way back in 1984, and each year misclassified workers cost millions in lost state and federal taxes. Certain sectors are particularly prone to misclassification, such as a small business, construction, delivery driving and off-site services like housecleaning. There can be obvious incentives for companies to shield themselves from liability and obligation for the expenses of employees, including the improved market position afforded by saving approximately 30 percent in labor costs. However, classification of a worker as employee or independent contractor is not a matter of choice. It is, rather, dictated by both federal and state law, and intentional misclassification can be a felony in Florida, as well as amount to income tax evasion, and a violation of labor laws. That said, there is no bright-line rule to classification, but instead a number of factors to be considered which, in their totality, point to a determination. As if that weren’t complicated enough, there are multiple approaches to analyzing a worker’s classification, depending upon the agency and jurisdiction at issue. Essentially, these come down to the primary questions of whether the business owner has a “degree of control” over the work, including where, when and how it takes place, as well as whether the worker is authentically in business.

‘Not Employees’ by Mandate

Into these already muddy waters, enter the ‘gig’ economy, with its further deconstruction of traditional work relationships. Companies like Amazon, Microsoft and FedEx have come under fire in recent years as challenges have been leveraged against their business models designed to reduce costs by relying on independent contractor agreements. Litigation involving rideshare sector giants Uber and Lyft has resulted in unsettled results: California has determined that drivers for these companies must be classified as employees; a Florida appellate court has held they are independent contractors. A federal class action is as yet, ongoing. Florida has recently taken steps to provide some clarity within its borders, enacting the 2017 Transportation Network Companies Act. Under the law, Florida drivers for Uber, Lyft and other rideshare companies (TNCs) are subject to their own codified classification analysis, comprised of four prongs which will effectively deem these drivers independent contractor status. Interestingly, one prong of the review, whether the parties sign a written contract calling the driver an independent contractor, turns on its head a consideration that has long been explicitly not a factor under traditional worker classification analysis. The new law will serve to bar claims by rideshare drivers for state unemployment or workers’ compensation. However, federal laws will remain controlling with respect to all federal labor, employment tax and wage and hour laws. Additionally, this terrain will continue to be hashed out on the national stage, bringing clarity at both state and federal levels. The new TNC law covers some additional issues, as well, including mandated background checks on drivers, zero-tolerance policies for drug and alcohol use, and a requirement that TNCs implement and enforce anti-discrimination policies. Whether you are a rideshare driver or other worker wondering about your employment status, you may be missing out on employee-type benefits, you should otherwise be entitled to. If you have a question about misclassification, talk to an employment law attorney. For more information about this area, see our employment law overview for employees and our labor law overview.