Independent Contractor And 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. In order to classify an individual as an employee or independent contractor, some factors will be considered and they include the following;
- The duration of the relationship.
- The investments involved by the contractor in equipment and facilities.
- The type of control the contractor has.
- The potential opportunity for making either profit or loss by the alleged contractor.
- How independent is the contractors business and operation?
These are just some factors that could be used to determine the employment relationship between any individuals. Other factors such as where the work is done, lack of employment agreement or whether the contractor is licensed by their state aren’t used to determine the employment relationship. It is also stated that the mode of payment or time of payment 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, then he must be compensated with the standard federal minimum wage which is $8.46 per hour and for the overtime pay he must be paid 1.5x of his normal minimum wage 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 own standard overtime pay.
When it comes to independent contractors most especially 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. In order to determine an individuals 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 most of the time can rise, this happens in some specific industries and when such happens there is the need to claim for your rights. Some of the industries where misclassification 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 important 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, but 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 which should be paid by your employer and 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 in order 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 good 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.