Independent Contractor versus Employee, Is There Any Difference?
Under FLSA, employees are different from independent contractors, and they must be differentiated. There must be an employment relationship before any FLSA rules apply to any individual. According to the U.S Supreme Court, there isn’t any particular rule that defines clearly whether an individual is an employee or an independent contractor, what determined the situation is the type of activity that’s involved. There are these factors to be considered in classification:
- The duration of the relationship.
- The investments a contractor has in equipment and facilities.
- The type of control that the contractor has over employees.
- The potential for making either a profit or loss by the contractor.
- How independent are the contractors’ business and operation?
These are just some factors to determine the employment relationship between individuals. Where the work is done, when there is no employment agreement, or whether the state license that the contractor has, establishes the employment relationship. The mode or time of payments can’t be used in determining the status of an employee.
If an individual has been categorized as an employee, that’s to say there is an employment relationship. He must be compensated with the standard federal minimum wage, which currently is $8.46 per hour, and for the overtime pay, he must be paid 1.5x of his standard minimum salary if he worked for more than 40 hours per week. The act also has different provisions for individuals that are under 18 years; they have their standard overtime pay.
When it comes to independent contractors, most notably in the construction industry, things can be entirely different. Sometimes employees want to be considered as independent contractors while they’re not and vice versa. To determine an individual’s status, he has to go through the independence test, and these laws vary in different states, so you need to check your state laws for independent contractor eligibility.
Industries Where Employees Are Misclassified More Often;
Misclassification can happen in specific industries. Some of these industries where misclassifications occur the most include;
- Construction trades such as installers, painters, electricians, plumbers or laborers, and many more.
- Delivery and courier service.
- Food processing plants.
- Maintenance crews.
- Nail Salons.
- Stocking vendors.
Florida Employment Law
Most Florida residents want to know whether they’re misclassified as employees instead of independent contractors, especially for individuals that want to be paid based on commissions instead of the hourly rate. If, for example, you’re a driver working for a car service company or you do some part-time editing for the local company, what’s your status? Are you an employee or an independent contractor?
Can You Determine Whether You’re An Independent Contractor Or Not?
Individuals can’t determine their category, your employer also doesn’t have that right to make such a decision, and instead, some factors will be considered. The type of work you do is one of the most critical factors that will be taken into consideration. Criminal penalties of up to $1,000 per misclassified worker and one year in prison can be imposed. It’s very important for the employer to understand the distinction between the two.
Why It’s Important To Know Your Status
It’s a must for employees and contractors to know their ideal status because it’s required by the internal revenue service to withhold income tax for employees. Still, for independent contractors, this law doesn’t hold.
If you’re an employee, you’re subject to some benefits such as worker compensation and social security. These are paid by your employer. Employees have the right to recover their benefits when they’re denied; as an employee, you’ll be covered by the minimum hourly rate.
Know Your Rights
The first step to take to prevent misclassification is to know your rights, and if you believe you’re misclassified, you need to talk to the person in charge so that you’re categorized appropriately. And if things are not sorted out, there is the need to seek legal advice on the matter; you should contact a competent attorney to guide on the process. If you have any questions regarding any employment agreement, contact us at Massey & Duffy to get the assistance you need.