Companies prefer to hire “subcontractors” and not “employees” to do the work. And why wouldn’t they? It eliminates their employee taxes, avoids all overtime compensation and they are not subject to the very laws that protect employees.
But where does that leave you? After all, if you are being treated as a subcontractor, you can take advantage of your own benefits too.
But those benefits are appealing only when you are truly a subcontractor.
Employees have the benefit of overtime pay. Subcontractors do not. Employees also have additional money paid into social security by their employer. Subcontractors do not.
Another advantage of being an employee is your ability to claim reemployment assistance benefits (if the job is ever lost). Subcontractors aren’t allowed to claim those benefits.
When these benefits outweigh those of being classified as a subcontractor, then you must seriously consider whether your classification is erroneous and, if it is, correct it.
There are instances of employers so brazen to classify their workers as subcontractors, despite everything screaming “employee!” These are easy to spot, though. And by the way, the intentional misclassification of a worker is a felony.
The difficulty comes when everything is in that “gray area” and it’s not so clear cut.
For example, are you working from home? Are you out on the road a lot? Do you have extra time to take on other similar side-jobs? Do you work odd hours? This all needs to be examined.
If we were to look in Chapter 443, Florida Statutes, we can find what determines whether or not the services you perform are subject to the Florida Reemployment Assistance Program Law.
The Florida Statutes dictate that the status individuals providing services are determined by the usual common law rules.
The common law rules set forth the following 10 factors of the relationship and it determines whether the individual is an employee or an independent contractor:
If the business dictates the work that should be done, how it should be done, when it should be done and where it should be done, then the worker is considered an employee. When a worker is required to comply with a business’ instructions, whether or not the worker needs supervision, is also indicative of an employer-employee relationship because of the control the business has over that worker. When subcontractors are hired, the business is only concerned about the end result and not the details of getting there. If the business requires you to do the work personally, the business exercises control and is indicative of an employer-employee relationship. Further, when a worker has a fixed schedule provided by the business, or, when the nature of the services provided makes fixed hours impractical, but the worker is required to work at certain times, it also factors into determining whether there is control by the employer. Other factors that indicate an employer-employee relationship exists also include requirements of working “full-time” hours (although not in all cases), not being permitted to work for anyone else, retaining the right to dictate that the worker perform the services in a set order or sequence, requiring the worker to report back in person regularly or in oral or written reports, the threat of being “fired” if the work is not performed in accordance with the business’ instructions or the worker being able to quit at any time. A worker that performs services for a number of persons or business is ordinarily not considered an employee. The same applies to a worker who makes their services available to the general public. If the worker sets his own hours, hires and fires his own staff, decides when, where and how the work gets done, and cannot be “fired”, but also can’t quit (there’s a contract to deliver), then these factors would show that the business does not exercise control over the worker and therefore are usually considered to be an independent contractor relationship. This “control” factor carries more weight than the remaining 9 common law factors.
If a business trains a worker, it indicates that the business wants the services performed in a particular manner and the worker is more likely to be considered an employee. Independent contractors, on the other hand, use his or her own methods and receive no training from the employer. A person in a particular occupation or business is more likely to be an independent contractor if the occupation or business is separate and distinct from the employer’s business.
The fact that the work is performed on the business’ premises is not necessarily “control”, although it might imply control if the work cannot be done anywhere else. However, having the option to perform the work off-premises does not necessarily mean that the business has no control either. The crucial factor here is whether or not the work is performed or done under the direction of the employer with supervision and not necessarily where it is performed. Indeed, in some occupations the services are necessarily performed away from the premises of the employer yet often times are considered an employer-employee relationship. This is true, for example, of employees that are in the construction business or public transportation drivers.
If the business hires, pays and supervises others on the same job as that of the worker, the business is usually exercising control over everyone on the job. If this is the case, then all the workers are likely to be considered employees. When the worker hires, fires, pays and supervises his own staff, under a contract providing that the worker furnish the labor and the materials and is solely responsible for the attaining a result, the worker is likely an independent contractor. However, if a worker hires, pays and supervises others at the direction of the employer, then the worker may be considered an employee.
When there is a skill required for a particular occupation, then it is more likely the worker is considered an independent contractor. An example of this is when the worker requires a professional license, like attorneys or real estate agents.
Independent contractors are generally expected to provide or purchase all their own tools, equipment and materials needed to get the job done. On the other hand, employees are not expected to provide their own tools, equipment and materials, or spend any of their own money in getting the job done. When the business furnishes the tools, equipment and materials, it tends to indicate that it is more of an employer-employee relationship than that of an independent contractor. By supplying the tools and materials, the business is therefore retaining more control (remember number 1 above?) over what tools and materials are used and, to an extent, how and in what order they are to be used. However, there are some occupations, for example, artisans, where it is the customary for workers to furnish their own tools and does not necessarily indicate a lack of control over the services of the worker. Yet, for a worker to be considered an independent contractor, a significant investment by the worker in facilities and other tools – when real, essential, and adequate – carries some weight.
A longer-term, continuous, and exclusive relationship is more likely to be considered an employment arrangement. When a worker is engaged for a single job or for sporadic or infrequent jobs, then it would indicate a subcontractor relationship. However, continuing services may imply otherwise when the nature of the work requires that it be performed at frequently recurring, though somewhat irregular intervals, such as when the worker is “on call” or whenever the work is available. Therefore, you would examine the permanency of the arrangement, even if services are provided on a part-time basis, or seasonally, or when the worker works only a short amount of time.
Normally, independent contractors perform their work one job at a time. Independent contractors are also generally paid by the job or on a straight commission basis. On the other hand, employees are paid for by their time. Also, when the worker is paid also indicates the type of relationship, unless it is simply a convenient method of paying an agreed upon lump sum as a cost of getting the intended result of the work. Note that when payments are received from a third party (for example, tips), it does not carry much weight in making the determination. A worker is generally considered an employee if there is a guaranteed a minimum salary or a drawing account of a definite amount at stated intervals and the worker is not required to repay any excess drawn over commissions earned. Also consider that employees get business and traveling expenses paid by their employer, while subcontractors do not and have to take care of all incidental expenses. Controlling expenses is an indication of the employer’s right to control the worker’s business activities.
When a worker performs services that are an integral part of what the employer provides to the general public, he or she is more likely to be considered an employee. When the services are so integral and essential to the business that it succeeds or fails as a result of how well those services are performed, then the business will often want to exercise enough control over the worker to ensure that the result is as required. This level of control indicates that an employer-employee relationship exists. When the services of the individual are merged into the services of the business, then the success or continuation of a business depends to an appreciable degree upon the performance of certain kinds of services, the people who perform those services must necessarily be subject to a certain amount of control by the owner of the business.
Written agreement between the parties describing the relationship should be honored, unless other provisions of the agreement, or the actual practice of the parties, show that the agreement is not a valid description of the status of the working relationship. In other words, if the written agreement between you and the employer shows that it is a subcontractor relationship, but in actual practice the employer treats you in all respects as an employee (except when it comes to paying you or filing tax returns), then the relationship should and is one of employer-employee, regardless of what the agreement says. How the worker is treated, not the language of a written agreement or the issuance of a 1099, determines whether the worker is an employee or an independent contractor.
If you find yourself answering yes to any of these questions, you may have a situation where your employer is wrongfully considering you a subcontractor, when you should be classified as an employee gaining the protections and benefits that come with that designation. Every situation is different, however, and simply answering “yes” does not mean that your employer is wrong or taking advantage of you. You must consider the relationship in its entirety before coming to a conclusion. If you find yourself in a situation where you believe the classification is incorrect, be sure to speak with your employer and have him reconsider. And you can always consult with an attorney if you ever feel you’ve been taken advantage of.