When people perform work for your business, you may assume they are all employees. However, there are other forms of workers with differing benefits and obligations. Mixing up worker status is more than a minor blunder. It could land you in trouble with the Department of Labor.
To learn the differences between employees, independent contractors, paid or unpaid interns, joint venturers, and seasonal help, speak with a knowledgeable attorney at Sparks Law. A Florida employee misclassification lawyer can scrutinize your hiring practices and help you avoid legal issues.
Employers present anyone paid for work in a fiscal year with IRS paperwork used to file federal income taxes. (Florida does not have a state income tax.) Employees receive W-2s that list taxes paid and deductions taken, such as for social security and any contributions to healthcare costs.
Independent contractors receive 1099s declaring the gross amount paid to the contractor since no taxes are withheld. Independent contractors pay their own taxes. Employees earn a set wage for performing assigned work. Contractors generally settle on a fee to complete a specific task, which they are paid in installments or as a lump sum when the project is completed.
Employees usually accrue benefits, such as a certain number of sick days or vacation pay for the length of time served. They often share in the company’s health insurance and savings plans.
Employers pay no benefits to independent contractors, although contractors determine how much they charge for their work. They can also pick and choose desirable projects, which they perform with less oversight than employees. Our Florida attorneys are skilled at drafting employment and independent contractor agreements that help delineate between the differing statuses.
Florida oversees workers’ compensation and unemployment payment, available to employees but generally not to independent contractors. The federal government controls social security and its retirement and disability payments. Employers and employees pay into Social Security, but independent contractors do not.
An employee misclassified as an independent contractor will lose quarters that count toward retirement payments. Employers can incur fines for this mistake, making it crucial to consult an experienced lawyer in the area to ensure employees are classified correctly.
The Department of Labor (DOL) speaks to employee misclassification in the Fair Labor Standards Act (FLSA). Sections 29 CFR Parts 780, 788, and 795 pose two questions for employers to distinguish an employee. The questions are part of an economic reality test. Employers must consider how much control they have over workers and if the worker will profit from the relationship because of their independent acts. Employers can further consider the following with a Florida employee misclassification attorney:
The keyword for the FLSA is control. When bosses control workers’ actions, such as how they do their jobs and what their jobs entail, wages, and exert control as the boss, they are probably dealing with employees. Workers who come and go on their own schedule and determine how they will approach a project are probably independent contractors.
It is not always easy to determine the status of someone performing work for your company. They may be a temporary hire, summer intern, new employee on probation, independent contractor, or longtime affiliate. You may hire all these types of workers at the same time. However, it is important to correctly identify the status of workers, or you could be subject to state and federal fines.
At Sparks Law, a knowledgeable Florida employee misclassification lawyer can help interpret state and federal rules that address your labor choices. Call today to discuss your questions about employment status.
