Pros, Cons, and Things to Keep in Mind for Independent Contractors

Pros, Cons, and Things to Keep in Mind for Independent Contractors

| Apr 18, 2017 | Business Law |

If a person works as an independent contractor, it means they contract with entities or individuals to provide services in exchange for some type of compensation. Most independent contractors don’t work exclusively or regularly for a single company, and they are not considered to be a traditional employee.

In most cases, an independent contractor charges a fee for their service, is only engaged for the specified amount of time to provide the service, retains economic independence, retains the ability to control the manner and method of work, is not protected by most laws designed to protect employees and is responsible for paying their own Medicare, Social Security and income taxes.

How Companies Benefit from Independent Contractors

When a company uses the services of independent contractors, they can avoid significant tax, wage and other obligations. This can result in a considerable amount of cost savings, as well as enhanced workforce flexibility. However, contractors aren’t the only ones who benefit. For those who want a greater amount of control over their schedule and work environment, being an independent contractor is the perfect fit.

Potential Drawbacks of Working as an Independent Contractor

Even though there are advantages for both parties when it comes to independent contractors, there are still things that need to be considered. For example, there is the potential liability of years of unpaid overtime pay, employee benefits, and taxes. The fact is, if a business misclassifies a worker as an independent contractor, it can mean hefty fines and penalties for all parties.

For example, companies that misclassify employees as independent contractors may wind up being liable for health plan coverage, overtime pay, back wages, stock options, insurance and tax obligations, workers’ compensation, retirement benefits and more.

Independent Contractors and Florida Law

According to Florida law, there is not a single or established definition of what an independent contractor is. There are different tests used to determine if an individual is a traditional employee or an independent contractor for purposes of employer liability, hour and wage laws, unemployment compensation, whistle-blowing, and workers compensation. Different interpretations and tests could mean that workers are independent contractors for some jobs, but employees for others. This can make using the services of independent contractors quite confusing and challenging.

Any employer that is thinking about using the services of independent contractors need to become familiar with the tests that are used and monitor misclassification litigation. This will help ensure they don’t violate any laws or face fines and penalties down the road.

An Attorney Can Help

Hiring a business attorney in Florida is beneficial for employers and independent contractors who have questions about this classification of worker. It is better to work with someone who understands the law, rather than trying to handle the situation on your own.

If you have questions about hiring independent contractors in Florida, contact the Law Office of Peter M. Feaman, P.A. by calling 561-734-5552. They can help ensure you fully understand the situation.