561-922-9661 mcobbe@cobbelaw.com

Companies, especially when they are starting out and beginning to grow, like the staffing flexibility independent contractors can bring to their business. You can hire contractors for short term or long term needs and they don’t require employee benefits or tax withholding, saving you money and time. However, this strategy could fail if an independent contractor is actually considered an employee for legal purposes.

While there is no magic formula for determining when someone working for you is an employee or an independent contractor, Florida and Federal law does provide guidance in this area. Some of the factors include, but are not limited to:

  • As a general rule, contractors determine where, when, and how the work gets done.
  • Companies typically hire contractors for their expertise based on the training and experience they acquired prior to working for your company.
  • Independent contractors typically provide (and pay for) their own equipment, supplies and tools and are not reimbursed for these items.
  • Contractors only get paid for work completed in accordance with their contract and set their own schedule as they work. This fee could be hourly, a flat fee or based on some other metric (i.e. commission based).

A Company should also consider the following:

  • Whether the contractor have a separate business entity or name?
  • Does the contractor have employees or work for other clients?
  • Does the contractor advertise services?
  • Is there a service contract or engagement letter and invoices for services between the parties?

The risk in using independent contractors is that if you are misclassifying your contractors, even unintentionally, and they actually qualify as your employees, you could be required to retroactively withhold employment taxes from the contractors’ compensation, provide them with benefit plans and comply with state and federal wage and hour laws, including the payment of overtime. Further, depending on the degree and duration of the noncompliance, you could be assessed with fines, penalties and interest.

Classifying a worker as an employee or independent contractor is not an easy task. 

Melody Cobbe is happy to assist your business in navigating the complexities of hiring independent contractors.

Cobbe Law is dedicated to helping start-ups and small businesses maximize profitability while minimizing legal exposure.  Melody, the owner of Cobbe Law, is passionate about supporting entrepreneurs and small businesses through business growth and providing big vision strategies.