Reduce Liability by Properly Classifying Independent Contractors
Throughout the Art of War, Master Tzu often instructs that the leader must depend on the quality of the army in order to wage war. In business, the CEO must create a team that will execute the business’ tasks on the path to success. An old adage of entrepreneurship is to “only do what you do, outsource everything else.” Thus, one of the key aspects of business success is having the right people on your team.
Organizing Your Team
Essentially, there are two ways to obtain personnel: first, you can obtain the services of independent contractors; or two, you can hire employees. Often, new businesses retain the services of independent contractors, though more states and the federal government are taking a closer look at independent contractors because of the drastic differences in both taxes and legal regulation. What steps can you take to ensure your team is properly created?
The on-demand economy has created an entirely new class of workers for whom the traditional independent contractor versus employee classification is not as clear. Presently, lawsuits have been filed by delivery drivers against GrubHub and DoorDash; and, similar actions are pending by drivers against Uber and Lyft. At the core of all these lawsuits is whether or not the drivers are properly classified as employees even though the companies explicitly identify them as independent contractors.
Florida, Independent Contractors, and Right of Control Test
In Florida, an independent contractor is typically determined through the “right of control” test. Basically, the more control exercised over an independent contractor’s work, the less likely that the contractor will be treated as “independent.” If an independent contractor is found not to be “independent,” then the person will instead be considered an employee of the business.
Below are different factors that a court uses to evaluate a person’s actual status under an independent contractor agreement.
- The employer’s extent of control over the details of the work;
- If the contractor is employed in a distinct occupation or business;
- If the type of work involved is completed under and employer’s direction or by a specialist that does not need supervision;
- The skills required for the occupation;
- If the employer supplies the instrumentalities, tools, and location of work;
- The length of the employment; and,
- If the work is part of the employer’s regular business.
These factors are all part of the analysis and the existence of all of them, or none of them, will not necessarily lead to a finding of employee over independent contractor.
Protect Your Business
As you are assembling your team, Yolofsky Law can help you to determine the proper relationship with your new worker. Contact us online for a consultation, or contact our Miami law office at 305-702-8250.