Well there are two general types of people that perform services: one would be a true employee, and the other would be an independent contractor. A lot of employers today misclassify individuals as independent contractors to gain some advantage.
What are the advantages?
They wouldn’t have to pay the employees’ share of FICA tax. They wouldn’t have to pay the employees’ share of social security. They don’t have to have a workers compensation policy. They don’t have to pay into unemployment compensation.
So if I’m your employer and I’m calling you an independent contractor, and you go to collect unemployment compensation or workers compensation you’re not going to get it because he hasn’t paid any money into the system.
It also avoids most employment laws.
In other words the discrimination laws, the retaliation laws, the whistle-blower laws, you have to be a true employee. It’s not designed to cover independent contractors. Same with wage and hour law.
Now, simply having an agreement that says you’re an independent contractor helps prove that you *might* be, but it really comes down on the day-to-day economic realities. What do you *do,* and how do you do it? Does the employer control not only your end product but how you do it? Then you’re going to be found to be an employee. Do they give you tools? Then you’re going to be found to be an employee.
If they have you sign a non-compete agreement as part of the independent contractor agreement, chances are courts are going to say you’re not an independent contractor because an employer can’t restrict what an independent contractor does. If I have an independent contractor come to my house to fix my roof, I can’t tell him he can’t work for anybody else in the neighborhood. So it’s the same kind of reality.
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A lot of employers today misclassify individuals as independent contractors to gain some advantage.
And employers should be careful because there is a provision in the tax code that if you can show they willfully misclassified an individual as an independent contractor to gain these advantages, then there are damages and attorney-fee provisions that can be filed against them.
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John Bolanovich is an Orlando commercial litigation and employment law attorney with Bogin, Munns & Munns, a full service law firm with offices in Orlando, Clermont, Cocoa, Kissimmee, Orange City, Daytona Beach, Ocala, Melbourne, Gainesville, Titusville, St. Cloud, The Villages, and Leesburg. He welcomes questions and comments regarding the above and can be reached at jbolanovich@boginmunns.com.
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