Independent Contractor vs. Employee – What is Your Status?

Employers and employees, alike, are often unaware of the repercussions associated with how they are characterized in the workplace.  When two persons agree that one will perform work for the other, the parties should be concerned with the legal significance of whether or not the arrangement creates an employer/employee relationship or an independent contractor relationship.  Whether one arrangement exists can result in the following consequences:  tax obligations — withholding, social security, and sales, prevailing wage rate obligations, indemnity and liability obligations for wrongful activities, insurance obligations and coverage issues and licensing.  Furthermore, an employer is not held liable for the negligent acts of its independent contractors, except where the contractor injures someone to whom the employer owes a non-delegable duty of care, such as where the employer is a school authority and the injured party a pupil.  An employer can also be held liable for the negligent selection of an independent contractor.

Due to concerns over the above factors, employers will commonly seek to establish their workers as independent contractors.  However, an employer is not at liberty to simply characterize an employee as an independent contractor by virtue of entering into an independent contract.  That is, a conclusory statement of independent contractor status in a contract document is not necessarily controlling for the purposes of agency principles. Rather, courts will survey the facts of each particular case in determining the relationship of the parties.  The following criteria have been adopted by Florida courts in making this determination: 1) the amount of control exercised by the employer over the work details; 2) whether or not the person employed is engaged in the performance of a distinct occupation or business; 3) the skill-set required to carry-out one’s work related duties; 4) length of employment; 5) whether the worker is performing duties that are part of the regular business of the employer; 6) whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; and 7) the method of payment, whether by the time or by the job.  Restatement Second of Agency § 220.

Ultimately, the most significant factor in the determination of whether or not an individual is an independent contractor turns on the employer’s power to control.  It is the right of control, and not actual control or interference with the work that determines the relationship between the parties.  In other words, if a person hired is subject to the control or direction of the owner merely as to the result to be obtained, he or she is an independent contractor.  If the one securing the services controls the means by which the task is accomplished or the results achieved, however, the one performing the service is an employee.