Security Personnel as Independent Contractors – Part I: What Makes an Individual an Independent Contractor Instead of an Employee?
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When someone hired by the company commits a wrong, the company’s potential exposure to liability varies greatly depending on whether the individual is classified as an “employee” or an “independent contractor.” In high-risk fields of service, like those involving security, “bouncers,” or other fields which may require a company to physically contact its customers, companies should pay careful attention to their corporate policies to understand the company’s potential exposure in the event of an accident involving these individuals.
This article is Part I in a series discussing how personnel in these high-risk fields are typically classified, and the relevant liability associated therewith. In this Part, the article explains the factors courts use to determine whether an individual is an “employee” or an “independent contractor.” Then, the article evaluates the factors as applied to Florida cases in which security personnel were determined to be “independent contractors” to the benefit of the company retaining them.
What the law calls “respondeat superior” refers to liability flowing from the principal-agent relationship, wherein a principal is held liable for the torts of his agent. As mentioned above, the determination that a tortfeasor (alleged wrongdoer) is an agent of the principal can be simplified, in the right circumstances, to a classification of the tortfeasor as either “independent contractor” or “employee.” Del Pilar v. DHL Glob. Customer Sols. (USA), Inc., 993 So. 2d 142, 145 (Fla. 1st DCA 2008), cause dismissed, 1 So. 3d 171 (Fla. 2008). Generally, principals are liable via respondeat superior for torts committed by employees but not for torts committed by independent contractors. Id.
So how is an individual classified as either an “employee” or an “independent contractor?” Florida courts have identified certain well-established factors to distinguish the independent contractor from the employee. Additionally, at least one court has identified contractual analysis as a threshold inquiry which comes before analyzing a list of factors:
In most cases, the terms of a contract between the parties is a pertinent index of the principal’s right of control and should factor heavily into the inquiry, “unless other provisions of the agreement, or the parties’ actual practice, demonstrate that it is not a valid indicator of status [or] … belie the creation of the status agreed to by the parties.” [internal citation.] In that case, “the actual practice and relationship of the parties should control.”
Del Pilar v. DHL Glob. Customer Sols. (USA), Inc., 993 So. 2d 142, 146 (Fla. 1st DCA 2008), cause dismissed, 1 So. 3d 171 (Fla. 2008) (emphasis added). After finding the contract to include conclusory boiler-plate language which did not dispose of the inquiry, the Del Pilar court factually analyzed the factors compiled from the opinions of various Florida District Courts of Appeals which all relate to the level of control exercised by the company over the retained individual:
- the principal’s right to control the agent’s use of the principal’s trademarks,
- reservation to the principal of the unilateral right to prohibit the agent from working on behalf of competitors,
- a requirement that the agent’s employees must undergo training before they work on the principal’s behalf,
- a requirement that the agent perform services using only equipment selected pursuant to the principal’s specifications,
- a requirement that the agent, when working on behalf of the principal, use a vehicle with the principal’s logo, placed according to parameters established by the principal,
- a requirement that the agent adhere to customer-service procedures established by the principal, and
- a requirement that the agent submit to inspections conducted at the principal’s discretion.
Id. at 146.
Federal courts within the Eleventh Circuit appear to apply similar, yet different, list of factors compared to the list enumerated by Del Pilar. However, the factors nevertheless center on the issue of control:
- the extent of control which, by the agreement, the master may exercise over the details of the work;
- whether or not the one employed is engaged in a distinct occupation or business;
- the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
- the skill required in the particular occupation;
- whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
- the length of time for which the person is employed;
- the method of payment, whether by the time or by the job;
- whether or not the work is a part of the regular business of the employer;
- whether or not the parties believe they are creating the relationship of master and servant; and
- whether the principal is or is not in business.
Martinez v. Miami-Dade Cty., 32 F. Supp. 3d 1232, 1237 (S.D. Fla. 2014), aff’d sub nom., Blue Martini Kendall, LLC v. Miami Dade Cty. Fla., 816 F.3d 1343 (11th Cir. 2016).
General Control Analysis
Notwithstanding those factors articulated in Del Pilar and Martinez, some courts focus on other factors not named above when evaluating the status of security personnel. Ernani v. City of Miami Beach, No. 12-CV-24550, 2014 WL 12514911, at *3 (S.D. Fla. Dec. 4, 2014). In Ernani, the court limited its evaluation to a general evaluation of the level of control exerted over the off-duty police officer. Id. at *3. The off-duty police officers worked security at a night club. Id. The officers were assigned to the night club exclusively (148 times), were standing within the velvet ropes of the nightclub, and worked as a team with the club’s security guards. Id. Nevertheless, the court rejected plaintiff’s claims that they were employees and instead ruled them to be independent contractors, reasoning:
Plaintiffs failed to show how the choice of assignment equated to an employment or agency relationship between the parties. Further…Mynt correctly argued that notifying a police officer about a problem did not give the person making the notification control over the police officer’s actions in response…. Moreover, there was no evidence that Mynt exercised control or domination over the police officers while they were standing outside the nightclub, even if Mynt chose the location in which the police officers were to stand…. The record shows that the police officers were employed by the [City of Miami Beach “CMB”], not Mynt; that they were paid by the CMB; that the CMB off-duty coordinator, not Mynt, decided which officers would be staffed; that they were governed by CMB policies at all times during their off-duty assignments; and that they were certainly CMB employees at the point of effectuating the arrest.
Id. The Ernani court held that the officers were not employees of Mynt and therefore Mynt [could not] be held vicariously liable for the actions of the police officers.” Id.
Evidence of control that supports a finding that an individual is an employee rather than an independent contractor can also be established, in part, by the presence of employment documentation. Nationwide Mut. Fire Ins. Co. v. Kaloust Fin., LLC, No. 8:12-CV-235-T-33MAP, 2013 WL 3270410, at *1 (M.D. Fla. June 26, 2013) (court considered presence of employment contracts); Quality Drywall Contractors, Inc. v. State, Dep’t of Lab. & Emp. Sec., Div. of Unemployment Comp., 501 So. 2d 144, 145-46 (Fla. 2d DCA 1987) (court considered whether individual completed a job application); Ware v. Money-Plan Int’l, Inc., 467 So. 2d 1072, 1074 (Fla. 2d DCA 1985) (court considered whether any company manuals controlled the individual’s mode of performance).
Furthermore, Florida courts and federal courts routinely evaluate payroll documents as one factor which indicates whether an individual is an independent contractor or employee. Nationwide, 2013 WL 3270410, at *6 (“Courts will look to the type of tax forms filed related to the individual to identify whether they are an employee or independent contractor.”); Martinez, 32 F. Supp. 3d at 1239 (court expressly considered “who pays taxes,” i.e., whether hiring company withheld taxes for the off-duty officers, and whether hiring company paid the off-duty officers directly); Kane Furniture Corp. v. Miranda, 506 So. 2d 1061, 1066 (Fla. 2d DCA 1987) (holding individual was independent contractor in part because company did not withhold individual’s income tax).
In sum, control is key. Companies intending to hire independent contractors need to closely scrutinize company policies and the roles for which they are hiring to ensure that they are actually hiring an “independent contractor” and not an “employee.” Furthermore, a company should employ Independent Contractor Agreements drafted by legal counsel with a clear understanding of what creates an independent contractor relationship to ensure that the company fulfills its hiring intent. As explained in Part II of this series, the effects of having an individual classified as an “employee” or an “independent contractor” could have substantial effects on the company’s potential legal exposure.