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 Duck, 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.
Over time the law has evolved to provide certain criteria or tests when determining whether or not a worker is an employee or independent contractor. Some of the general principals are referenced below.
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.
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).
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.