The Florida Workers’ Compensation Act requires most Florida employers to purchase workers’ compensation insurance that covers their employees. The Act also states that employers are not required to provide coverage for independent contractors. One exception to that rule (discussed below) applies to construction workers. For the most part, however, employers are not required to provide employment benefits to independent contractors, including workers’ compensation coverage, unemployment insurance coverage, and contributions to the worker’s FICA taxes.
Employers can save significant money by misclassifying an employee as an independent contractor. Some employers don’t understand the distinction, while other employers deliberately misclassify employees to increase the profitability of their businesses.
Whether a worker who is injured while working is entitled to workers’ compensation benefits depends on whether the law requires the worker to be classified as an employee, not on the business’ classification of the worker as an independent contractor. Sometimes a worker’s status is obvious. On other occasions, the correct classification is less clear. Workers’ compensation lawyers need to evaluate all the facts to determine whether a work injury victim who was classified as an independent contractor is entitled to workers’ compensation benefits.
An independent contractor is self-employed. While an independent contractor might be hired to perform work for a business, being hired as an independent contractor does not usually create an employment relationship.
For example, a website designer might be hired to set up a website for a retail business. The designer might charge by the hour, but payment of an hourly fee will not usually be enough to make the designer an employee of the business. If the designer provides services to many different businesses, the designer is probably an independent contractor.
Suppose, however, the designer sets up the website and then works full time under a supervisor’s direction to add new merchandise and promotional content to the website, troubleshoot glitches, and refer emails from customers to appropriate employees for a response. The law might classify the designer as an employee even though the store pays the designer as an independent contractor.
Different legal rules determine whether a worker is an employee or an independent contractor, depending on the purpose for which the classification is made. Different states also apply different tests. The Florida Workers’ Compensation Act requires at least four of these seven factors to apply before a worker can be classified as an independent contractor:
1. The worker maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations.
2. The worker holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal regulations.
3. The worker receives compensation for services rendered or work performed and such compensation is paid to a business rather than to an individual.
4. The worker holds one or more bank accounts in the name of the business entity for purposes of paying business expenses or other expenses related to services rendered or work performed for compensation.
5. The worker performs work or is able to perform work for any entity in addition to or besides the employer at his or her own election without the necessity of completing an employment application or process.
6. The worker receives compensation for work or services rendered on a competitive-bid basis or completion of a task or a set of tasks as defined by a contractual agreement, unless such contractual agreement expressly states that an employment relationship exists.
While a sufficient combination of factors will usually determine whether a worker is an independent contractor, judges can also consider whether other facts exist that are commonly true of independent contractors, including:
1. The worker performs or agrees to perform specific services or work for a specific amount of money and controls the means of performing the services or work.
2. The worker incurs the principal expenses related to the service or work that he or she performs or agrees to perform.
3. The worker is responsible for the satisfactory completion of the work or services that he or she performs or agrees to perform.
4. The worker receives compensation for work or services performed for a commission or on a per-job basis and not on any other basis.
5. The worker may realize a profit or suffer a loss in connection with performing work or services.
6. The worker has to continue or recurring business liabilities or obligations.
7. The success or failure of the workers depends on the relationship of business receipts to expenditures.
Whether a worker is an independent contractor can be a judgment call. Different judges might decide the question in different ways. Workers’ compensation lawyers are in a good position to predict how either a court or a workers’ compensation judge might decide the question.
Under Florida law, an independent contractor “working or performing services in the construction industry” is an employee for the purposes of the Workers’ Compensation Act. Like many legal questions, whether a worker is working “in the construction industry” can be confusing.
Workers’ compensation law defines the construction industry as “for-profit activities involving any . . . substantial improvement in the . . . use of any structure.” Regulations have designated certain kinds of work and occupations as falling within the construction industry, but that list is not comprehensive.
Florida court decisions have arrived at different conclusions about whether a worker was performing services in the construction industry. Each case turns on its own facts. For example, the court held that a worker who was sealing a leaking skylight while performing roof repairs was working in the construction industry because the worker was improving the structure. On the other hand, a worker who was hauling debris during a demolition project was not, in the court’s opinion, engaged in activities that improved a structure or the use of a structure.
In a recent case, a Florida court was asked whether a cable installer was working in the construction industry. While conceding that cable brings telecommunication services into a building that enhances the usefulness of the structure, the court was not satisfied that the evidence proved that cable installation makes a substantial improvement in the use of the structure.
Whether an individual who is paid as an independent contractor is working in the construction industry is often unclear. A workers’ compensation lawyer can investigate all the facts and help injury victims understand whether they are entitled to workers’ compensation benefits.