Orlando employers are increasingly attempting to classify workers as independent contractors.  The upside for the employer is substantial in terms of avoiding payroll taxes, worker’s compensation insurance, minimum wages, overtime wages, and, even, compliance with anti-discrimination laws which apply to employees and applicants for employment and not to independent contractors of the employer.

The upside to the worker of an independent contractor arrangement (i.e., the illusory promise of higher wages unencumbered by payroll taxes) is often outweighed by the downside to this arrangement.  The worker will still be required to pay income tax on wages earned in an independent contractor scenario.  Furthermore, the worker may have to retain an accountant or CPA to keep track of receipts and complete their personal and “business” tax returns at the end of the fiscal year.  These are costs that are not readily apparent to the worker.

Furthermore, the downside to an independent contractor arrangement could entail diminished social security returns in the future, unpaid medical bills resulting from workplace injury not covered by medical or worker’s compensation insurance, lower wages for longer hours worked, and, even, exposure to discriminatory treatment or harassment.  These downsides are often unforeseen by the worker.  Therefore, the law applies two (2) tests to examine whether a worker was misclassified as an independent contractor.

The first test (i.e., the economic realities test) is applied to minimum wage, overtime, and Family Medical Leave Act situations.  The factors considered under the economic realities test are: (1) the employer’s degree of control over the worker’s job functions (i.e., the higher the degree of the employer’s control over the worker, then the more likely that the worker is, in fact, an employee); (2) the worker’s opportunity for profit or loss (i.e., if the worker is required to exclusively work for the employer or per the employer’s terms of pay, then the more likely that the worker is, in fact, an employee); (3) the relative investments of the employer vis-à-vis the worker (i.e., if the employer has invested more time and money into the enterprise than the worker, then it is more likely than not that the worker is, in fact, an employee); (4) the degree of skill and initiative required to perform the worker’s job (i.e., if the work requires average or below average skill or training, then it is more likely that the worker is, in fact, an employee); (5) the permanency of the relationship (i.e., if the worker is working for a specific period of time or completing a specific project (e.g., installing new plumbing for the employer) rather than working on an at-will basis, then the worker is more likely an independent contractor); and (6) the nature of the worker’s services to the employer’s business (i.e., to use the plumbing example again, if the employer’s business is a law firm, then the person retained to install the new plumbing is not likely to be construed as an employee of the business).

The second test used to determine whether a worker is an employee is the common law test.  The common law test has eight (8) factors which we will explore in part two of this article.  So, stayed tuned.  In the meantime, should you have any questions regarding your current arrangement, feel free to contact one of the employment attorneys at Bogin, Munns & Munns, P.A. to coordinate a consultation.

– Daniel Perez, Esq., is an attorney with Bogin, Munns, & Munns, P.A., a full service law firm with offices in Orlando, Clermont, Kissimmee, Deltona, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida.  Mr. Perez works out of the Melbourne office of the firm and welcomes questions and comments regarding the above and can be reached at dperez@boginmunns.com

NO LEGAL ADVICE: This blog entry is not intended as legal advice nor should you consider it as such. It is intended only as general information.  You should not act upon this information without retaining professional legal counsel. Please keep in mind that merely subscribing to or reading this blog or otherwise contacting Bogin Munns & Munns, P.A. in the manner that you have will not establish an attorney-client relationship with our firm. Bogin Munns & Munns, P.A. cannot represent you until the firm knows there would not be a conflict of interest, and the firm determines that it is otherwise able to accept the engagement.

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