Independent contractors in Florida can fulfill multiple needs for employers. They may help during peak business times, provide short-term help for special events or promotions, or even serve a primary ongoing role for a particular type of service. Understanding the difference between an employee vs. independent contractor is important to ensure workplace rights are upheld.
Did you sign an independent contractor agreement in Florida and are now concerned about independent contractor labor laws? The following information will clarify the differences between an employee vs. independent contractor, and provide you with additional valuable information.
Employee vs. Contractor Checklist: The Basics
There are clear differences in the business relationship of an independent contractor in Florida and employees with the companies they work for in the state. One of the primary differences is that employers are not required to take out taxes and other legal deductions such as Social Security and Medicare, for independent contractors, including state, federal, or local taxes.
Additional differences in the business relationship between employers of independent contractors in Florida and employees are detailed in this checklist.
✔ Employer reports all money paid to the employee during the tax year on a W-2
✔ Generally, an employee is paid an hourly rate or a salary
✔ Payment period remains the same unless formally changed (ex: weekly, biweekly, or monthly)
✔ Employer reports employee for state and federal Unemployment Insurance and Workers’ Compensation insurance
✔ Employees are covered by several federal and state employment and labor laws
✔ Independent contractor in Florida reports payments of $600 or more in a calendar year on a IRS Form 1099
✔ Compensation may be a total amount for a specific task completed or in the form of hourly, daily, or weekly rates and is typically paid when work is complete
✔ Payment is due after an invoice is sent by the contractor; terms of contract or Statement of Work dictates when payments are made
✔ Employer does not report independent contractor for state and federal Unemployment Insurance or Workers’ Compensation insurance
✔ Independent contractors are not covered by employment and labor laws
Employees are also offered benefits such as vacation, sick time or other paid time of, health insurance and 401K contributions, while independent contractors are not.
The Complexities of Classification
With these basic distinctions, independent contractors in Florida should be clear on the parameters of a contract before signing an agreement with a company. Being an independent contractor can be a good way to bring in income, but understand you are not a typical employee with protections under federal and state laws regarding workplace rights.
Problems can arise when workers that are legally considered employees are being treated as independent contractors in Florida. Even if you sign a contract with language that says you are an independent contractor, that does not necessarily mean that you are one. The control of work and work behavior is central to this analysis, including financial control, behavioral control, and the relationship that exists between the worker and the employer. If you are under the employer’s control from an operational as well as financial aspect, you are probably legally considered an employee even if you signed an independent contractor agreement.
The U.S. Supreme Court has ruled that no single test or rule differentiates an independent contractor from an employee. They instruct that the overall work situation must be evaluated as a whole., which is why the basic guide above is not the only information to consider. Workers must always be alert to being misclassified.
Misclassification Risks to Employees
Misclassification can occur when employers want to receive financial savings by not paying benefits and be responsible for taxes for employees. They may want to take advantage of your talent and expertise but not be required by law to adhere to the Fair Labor Standards Act (FLSA) and other federal and state employment laws protecting workers.
Common Industries Where Workers are Misclassified
Employees are required to receive at least the minimum wage set under federal law, or the higher wage set by local or state law. Independent contractors are not. Here are some common industries/jobs where workers are misclassified as independent contractors in Florida:
- Delivery and courier services
- Maintenance crews
- Hospitality workers
- Healthcare, including nurses and home health aides
- Food production, including workers in food processing plants
- Hair and nail salon workers
- Vendors/stocking workers
These are common industries where employers may misclassify workers. Although, this list is not comprehensive. Other cases of misclassification can occur across Florida.
Laws Protecting Independent Contractors
The laws in Florida are in alignment with the U.S. Supreme Court, Internal Revenue Service guidance and regulations and other applicable court rulings. It comes down to control and the economic dependence the worker has on the employer, which includes:
- the control of details of the work performed,
- the supervision the employer has over the worker and the work performed,
- the duration and exclusivity of the worker’s relationship with the company,,
- written agreements or understanding between the worker and the company as to the scope and terms of the relationship, and
- whether or not the tools/resources needed to perform the job are provided by the worker or the employer.
Independent contractors are responsible for their own state and federal taxes, and other payments such as Social Security and Medicare contributions. It is also important to note that workers who receive a 1099-MISC form are not entitled to overtime pay.
If the tax documents by the employer report all money paid to the employee during the tax year on a W-2 instead of a 1099, then the worker is considered an employee.
Independent contractor labor laws are in place to allow entrepreneurs and others to obtain work, but employers should not exploit these.
Employee vs. Independent Contractor: Understanding Your Workplace Rights
There are many successful independent contractors in Florida. But it is important to be clear if you are properly classified to ensure your workplace rights are being honored under state and federal law.
Employees in healthcare, hospitality, delivery services, maintenance, and other fields can be taken advantage of by employers, including not receiving benefits and not being paid overtime that they are rightfully due. Even if you signed a contract, that does not necessarily mean you would be legally defined as an independent contractor in Florida.
Consider the basic differentiations listed above first and then get clarification on the control of the work and your working relationship with the employer. If you feel you have been misclassified and your rights as a legal employee have been violated, consult with an employee rights attorney.