Independent Contractor Vs. Employee
Business Business Organization Lawsuit & Dispute Litigation Employment Employment Contracts
Summary: Employers all across Florida have looked at the cost benefit analysis when either hiring an employee or deciding to contract with an independent contractor to perform services.
EMPLOYEE OR INDEPENDENT CONTRACTOR? YOU MAY BE ONE OR THE OTHER AND NOT KNOW IT
Employers all across Florida have
looked at the cost benefit analysis when either hiring an employee or deciding
to contract with an independent contractor to perform services. On the surface, it’s an easy analysis based
largely upon dollars and cents, costs of an employee, insurance, sustainability
of work-load and market uncertainty.
However, when peeling back the surface and digging into what the law
considers an employee creates a significantly different equation.
If it quacks like a Duck, if it walks
like a Ducks, it’s a Duck!!! Similarly,
if a “worker” shows up every day, reports to a manager, uses the company
stationary, business cards, computers and needs to request time off then even
if the agreement says “Independent Contractor” the “worker” is still a Duck and could
possibly be an Employee.
A statement in an agreement
between parties that one is an independent contractor . . . is not dispositive
of that issue.” Metsker v. Carefree/Scott
Fetzer Co., 90 So.3d 973, 980 (Fla. 2d DCA 2012). In 1966, the Florida
Supreme Court, in Cantor v. Cochran,
applied the Restatement (Second) of Agency’s test for determining whether an
agent is an employee or an independent contractor. 184 So.2d 173, 174–175 (Fla.
1966). Factors that must be considered in determining whether an agent is an
employee include:
(a)
The extent of control which, by the agreement,
the master may exercise over the details of the work;
(b)
Whether or not the one employed is engaged in a
distinct occupation or business;
(c)
The kind of occupation, with reference to
whether, in the locality, the work is usually done under the direction of
employer or by a specialist without supervision;
(d)
The skill required in the particular occupation;
(e)
Whether the employer or the workman supplies the
instrumentalities, tools, and the place of work for the person doing the work;
(f)
The length of time for which the person is
employed;
(g)
The method of payment, whether by time or by the
job;
(h)
Whether or not the work is a part of the regular
business of the employer;
(i)
Whether or not the parties believe they are
creating the relation of master and servant; and,
(j)
Whether the principal is or is not in business.
However, the Second District
Court of Appeal consolidated the factors espoused in Cantor to a single, common thread: control.[1]
“The standard for determining whether an agent is an independent contractor [or
an employee] is the degree of control
exercised by the employer or owner over the agent.” Metsker, 90 So.3d at 980 (Fla. 2d DCA
2012). The Second District Court of Appeal states:
It has been said
that the extent of control is the most important factor in determining whether
a person is an independent contractor or an employee. The right of control as
to the mode of doing the work is the principal consideration. If a person is
subject to the control or direction of another as to his results only, he is an
independent contractor; if he is subject to control as to the means used to
achieve the results, he is an employee.
By
way of example, the Fourth District Court of Appeal held that a dump truck
driver was an employee of a parent company because of the control exuded by the
construction company over the driver. Collins
v. Federated Mut. Implement & Hardware Ins. Co., 247 So.2d 461, 464
(Fla. 4th DCA 1971). In Collins, the
construction company dictated the manner and means of how the job was to be
done. Id. Furthermore, the
construction company dictated what work the driver was to complete. Id. Finally, the construction company
dictated what hours the driver would work. Id.
According to the Fourth District Court of Appeal, this control amounted to an
employer-employee relationship.
In
sum, Employers out there should be weary if there business model includes the
use of “independent contractors” and the only consideration being an initial
cost savings for payroll, insurance and benefits. As shown above its imperative that Employers
evaluate how they are using certain workers and seek opinions from there legal
counsel, human resource professionals and tax advisors. In the long run the costs associated with defending
a dispute or employment related violation will ultimately outweigh the
perceived cost savings of hiring an independent contractor when that Duck is
actually an Employee.
Darren Inverso is a Shareholder attorney with the
Sarasota law firm of Norton, Hammersley specializing in Construction and
Commercial Litigation, Real Estate law, Banking law, Condominium Association
law, Estate and Probate matters and Creditors rights. He can be reached at
(941) 954-4691 or via email at dinverso@nhlsalw.com
[1] “Although
formal tests or criteria should not be overemphasized because they create a
danger of giving legal sanction to the mere appearance of an independent
contractor relationship by those seeking to avoid the responsibilities of an
employer-employee relationship, such criteria are still helpful in determining
whether someone is an employee or independent contractor.” Ware v. Money-Plan Int’l, Inc., 467 So.2d 1072, 1074 (Fla. 2d DCA
1985).