Employee or Independent Contractor?
Classification of workers as employees or independent contractors is a question of federal and state law. On June 7, 2017, the DOL’s Wage and Hour Division (WHD) announced the withdrawal of its 2015 guidance on independent contractor classification under the Fair Labor Standards Act (and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA)), effective immediately.
The FLSA’s minimum wage and overtime pay provisions apply only to “employees,” meaning that an employment relationship must exist between a worker and the employer. The FLSA’s definition of “employ” includes to “suffer or permit to work,” and is widely recognized as the broadest among federal employment laws. The Department of Labor’s long-standing position is that workers who are economically dependent on the business of an employer, regardless of their skill level, are employees, and that most workers fall into that category. The guidance also reiterated the six “economic realities” factors the DOL considers when determining if an employment relationship exists and emphasized that no single factor is determinative.
Florida courts use the following factors when determining whether a person is an independent contractor.
• The extent of control that the master has over the details of the person’s work.
• Whether the person is engaged in a distinct occupation or business.
• Whether the person’s occupation is usually done without supervision in the relevant locality.
• The level of skill is required for the job.
• Whether the person supplies the person’s own tools and place of work to do the job.
• How long the person is employed.
• Whether the person is paid by the time spent or by the job.
• Whether the work performed is in the employer’s regular business.
• Whether the parties believe they are creating an employer-employee relationship.
• Whether the employer is or is not in business.
The most important factor in determining whether a person is an independent contractor is the extent of control the employer asserts over the employee. Florida courts also consider the agreement between the parties and whether an employer provides employee benefits to the independent contractor. Where the parties’ actual practice contradicts their agreed-on relationship, however, Florida courts hold that the parties’ actual practice controls the definition of their relationship. (Harper ex rel. Daley v. Toler, 884 So.2d 1124, 1133-34 (Fla. Dist. Ct. App. 2004).)
The DOL’s withdrawal of its 2015 guidance is no excuse to be less vigilant about independent contractor classification. There continues to be private litigation regarding misclassification claims by individuals seeking compensation and benefits of being an employee.
If you have concerns about the classification of workers as employees or independent contractors, contact Crary Buchanan, P.A. for guidance particular to your business and services.