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>The rules, such as they are, seem fairly straightforward. The laws are anything but straightforward. For starters there are 50 States with each one having dif

>The rules, such as they are, seem fairly straightforward. The laws are anything but straightforward. For starters there are 50 States with each one having different laws. Take Florida where I have personally represented employers and employees/Independent contractors in these types of matters. The FL case law establishes, what in my opinion is the very worst kind of law, a factors test. So essentially there are a number of factors the courts put forward, I believe 7 factors by my last count, and in each instance a court would have to analyze each case on its own merits, and by case I am referring to each employee/Independent Contractor not each company as a whole. One of the most heavily weighted factors is who the company pays...does the company pay the employee/independent contractor individually or pay a company formed by the individual. It would be evidence enough to simply determine which start-ups have a policy against paying any individual and requiring all individuals form companies. If start-up does't require their Independent Contractors to set up separate entities the start-ups deserve what is coming to them, a finding by the Courts these were employees.

tptacek 12y ago
The rules the parent commenter is referring to are federal, and extraordinarily well-known, because several generations of businesses have tried to come up with ways to skirt them to avoid taxes. As far as I understand the rules, the "most heavily weighted factor" you cite is in fact not an IRS employee classification factor at all. A contractor can still be classified as an employee even though they bill through an LLC. BigCo's worry about this so much that they will sometimes withhold taxes from LLCs.
- will_brown 12y ago
  Even upon rereading OP it is not clear it was referring to Federal Law, there is even mention of both State and Federal Departments of labor, so I think use of the word rule was an all encompassing term for classification law. Still it only adds to the problems with this area of the law, after all it is not only possible, but common, for an individual to be classified as an employee/independent contractor on the federal level and then classified the opposite at the state level. Nevertheless, while the federal classification 20 factors have been around for about 30 years, since the enactment of the Revenue Act the IRS has been prohibited from issuing regulations and rulings with respect to the employment status of any individuals. As a result the IRS acknowledges the same subjectivity going so far as to admit different IRS agents may reach different conclusions, the Courts are no different and hence my calling factors tests the worst kind of law. >As far as I understand the rules, the "most heavily weighted factor" you cite is in fact not an IRS employee classification factor at all. A contractor can still be classified as an employee... This is likely due to the IRS being prohibited from issuing rules and regulations, and as a result in the words of the IRS, "Previously issued guidance may not reflect current case law, statutory changes, or changes in workplace situations." However, you are correct that this factor, under FL case law, though weighted more heavily is not determinative by any means.
  - tptacek 12y ago
    This is likely due to the IRS being prohibited from issuing rules and regulations, and as a result in the words of the IRS, "Previously issued guidance may not reflect current case law, statutory changes, or changes in workplace situations." However, you are correct that this factor, under FL case law, though weighted more heavily is not determinative by any means. I've read this 3 times and I don't really understand what it means, so I'll just repeat myself: The IRS contractor rules are the most important employee classification rules with any bearing on this discussion, and they are both clear and very well-understood by employers. You're a lawyer, so I feel like it's weird that we're having this discussion. I am not a lawyer, but I am something like 99.999% sure that 1099'ing an LLC does very little to ensure that a contractor can't be retroactively classified as an FTE for whom W2 withholding was required.
    - will_brown 12y ago
      >The IRS contractor rules are the most important employee classification rules with any bearing on this discussion, and they are both clear and very well-understood by employers. You can not say IRS rules are more important than State case law for purposes of classification or this discussion. Such a statement shows the law is anything but clear. Federal/State classifications are an independent determination and require separate analysis. Example, say A hires B as an Independent Contractor, having focused on complying with only the Federal factors, then B sues A at the State level after being was injured on the job claiming A misidentified B, whereas B claims he was really an employee and should receive workers comp. The Court is not going to apply the Federal Rules/Law they will apply the State Law, in fact we can go ahead and assume B was correctly a Independent Contractor at the Federal Level, but the Court could find under State Law B was classified and the relationship was that of employee/employer now A is liable for failing to comply with State Law and have to pay B's workers comp. This is the exact type of lawsuit that could be replicated hundreds or thousands of times sinking any Start-up, who fails to comply with any aspect of the classification paradigm. >I am not a lawyer, but I am something like 99.999% sure that 1099'ing an LLC does very little to ensure that a contractor can't be retroactively classified as an FTE for whom W2 withholding was required. As I said you are correct, just because you pay a company rather than a individual does not automatically make that an Independent Contractor relationship, but it is one factor. For example, in the Florida Worker's Compensation Statute (which provides its own factors, separate from both Florida Case Law and the IRS 20 Factors) factor number 2 reads: "(II) The independent contractor holds or has applied for a federal employer identification number..." [1] http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0400-0499/0440/Sections/0440.02.html http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Displ...
- CPLX 12y ago
  You are correct. Most of the obfuscation comes from the fact that people don't like to follow the rules. It's actually not that hard to sum up the difference between a contractor and an employee. If the suspected employer regulates the time, place, and manner of the work being performed, chances are they're not contractors. Yes, there's more nuance than that. But most of the supposed controversy usually involves people trying to pretend that basic premise isn't true for some reason. Usually without success.
  - GauntletWizard 12y ago
    Huh; This is the best argument I've heard for Uber drivers being Contractors rather than Employees. In fact, it's a pretty good argument for all of 'gig culture' being contractors, since you can accept and reject jobs. I'd previously been strongly on the other side.
    - cstejerean 12y ago
      Except for the manner of the work portion. That part makes it questionable.
    - CPLX 12y ago
      In my personal opinion, the driving services are a legitimate and genuine gray area. A person who is a professional driver, owns their own equipment (the car of course), can pick their own shifts and accept or reject a ride, can drive to different areas if they want, and does in fact have the ability to solicit work from multiple customers, could be considered independent. I can also see the flip side of that, but it's at least arguable. I think the time, place, and manner argument comes into much sharper focus with the personal service type "gigs" that are out there. Low level janitorial work is really not likely to be an independent gig, and whatever claims to that were had by the company in the original post start to evaporate when they dictate bathroom breaks, what shirt is being worn, etc. There's really not much to argue here. They don't get to pick the times (booked by the customer via the employer) the places (same) and the manner (as the article states) by which they complete their work. They are part time workers for janitorial service that solicits business online.
supercanuck 12y ago
Are there any Florida "Factors" that are directly contradictory of the IRS's 3 Common Law categories?
- will_brown 12y ago
  Not contradictory as far as I am aware. The IRS 20 factors: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ... Florida 10 factors, Keith v. News & Sun Sentinel Co., 667 So. 2d 167 (Supreme Court of Florida, 1995), for purposes of determining worker's comp eligibility: • The extent of control that the employer may exercise over the details of the work; • Whether or not the individual employed is engaged in a distinct occupation or business; • 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 employee or the worker 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 part of the regular business of the employer; • Whether or not the parties believe they are creating the relation of employer and employee; and • Whether the individual is or is not in business.

tptacek 12y ago

The rules the parent commenter is referring to are federal, and extraordinarily well-known, because several generations of businesses have tried to come up with ways to skirt them to avoid taxes. As far as I understand the rules, the "most heavily weighted factor" you cite is in fact not an IRS employee classification factor at all. A contractor can still be classified as an employee even though they bill through an LLC. BigCo's worry about this so much that they will sometimes withhold taxes from LLCs.

will_brown 12y ago
Even upon rereading OP it is not clear it was referring to Federal Law, there is even mention of both State and Federal Departments of labor, so I think use of the word rule was an all encompassing term for classification law. Still it only adds to the problems with this area of the law, after all it is not only possible, but common, for an individual to be classified as an employee/independent contractor on the federal level and then classified the opposite at the state level. Nevertheless, while the federal classification 20 factors have been around for about 30 years, since the enactment of the Revenue Act the IRS has been prohibited from issuing regulations and rulings with respect to the employment status of any individuals. As a result the IRS acknowledges the same subjectivity going so far as to admit different IRS agents may reach different conclusions, the Courts are no different and hence my calling factors tests the worst kind of law. >As far as I understand the rules, the "most heavily weighted factor" you cite is in fact not an IRS employee classification factor at all. A contractor can still be classified as an employee... This is likely due to the IRS being prohibited from issuing rules and regulations, and as a result in the words of the IRS, "Previously issued guidance may not reflect current case law, statutory changes, or changes in workplace situations." However, you are correct that this factor, under FL case law, though weighted more heavily is not determinative by any means.
- tptacek 12y ago
  This is likely due to the IRS being prohibited from issuing rules and regulations, and as a result in the words of the IRS, "Previously issued guidance may not reflect current case law, statutory changes, or changes in workplace situations." However, you are correct that this factor, under FL case law, though weighted more heavily is not determinative by any means. I've read this 3 times and I don't really understand what it means, so I'll just repeat myself: The IRS contractor rules are the most important employee classification rules with any bearing on this discussion, and they are both clear and very well-understood by employers. You're a lawyer, so I feel like it's weird that we're having this discussion. I am not a lawyer, but I am something like 99.999% sure that 1099'ing an LLC does very little to ensure that a contractor can't be retroactively classified as an FTE for whom W2 withholding was required.
  - will_brown 12y ago
    >The IRS contractor rules are the most important employee classification rules with any bearing on this discussion, and they are both clear and very well-understood by employers. You can not say IRS rules are more important than State case law for purposes of classification or this discussion. Such a statement shows the law is anything but clear. Federal/State classifications are an independent determination and require separate analysis. Example, say A hires B as an Independent Contractor, having focused on complying with only the Federal factors, then B sues A at the State level after being was injured on the job claiming A misidentified B, whereas B claims he was really an employee and should receive workers comp. The Court is not going to apply the Federal Rules/Law they will apply the State Law, in fact we can go ahead and assume B was correctly a Independent Contractor at the Federal Level, but the Court could find under State Law B was classified and the relationship was that of employee/employer now A is liable for failing to comply with State Law and have to pay B's workers comp. This is the exact type of lawsuit that could be replicated hundreds or thousands of times sinking any Start-up, who fails to comply with any aspect of the classification paradigm. >I am not a lawyer, but I am something like 99.999% sure that 1099'ing an LLC does very little to ensure that a contractor can't be retroactively classified as an FTE for whom W2 withholding was required. As I said you are correct, just because you pay a company rather than a individual does not automatically make that an Independent Contractor relationship, but it is one factor. For example, in the Florida Worker's Compensation Statute (which provides its own factors, separate from both Florida Case Law and the IRS 20 Factors) factor number 2 reads: "(II) The independent contractor holds or has applied for a federal employer identification number..." [1] http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0400-0499/0440/Sections/0440.02.html http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Displ...
CPLX 12y ago
You are correct. Most of the obfuscation comes from the fact that people don't like to follow the rules. It's actually not that hard to sum up the difference between a contractor and an employee. If the suspected employer regulates the time, place, and manner of the work being performed, chances are they're not contractors. Yes, there's more nuance than that. But most of the supposed controversy usually involves people trying to pretend that basic premise isn't true for some reason. Usually without success.
- GauntletWizard 12y ago
  Huh; This is the best argument I've heard for Uber drivers being Contractors rather than Employees. In fact, it's a pretty good argument for all of 'gig culture' being contractors, since you can accept and reject jobs. I'd previously been strongly on the other side.
  - cstejerean 12y ago
    Except for the manner of the work portion. That part makes it questionable.
  - CPLX 12y ago
    In my personal opinion, the driving services are a legitimate and genuine gray area. A person who is a professional driver, owns their own equipment (the car of course), can pick their own shifts and accept or reject a ride, can drive to different areas if they want, and does in fact have the ability to solicit work from multiple customers, could be considered independent. I can also see the flip side of that, but it's at least arguable. I think the time, place, and manner argument comes into much sharper focus with the personal service type "gigs" that are out there. Low level janitorial work is really not likely to be an independent gig, and whatever claims to that were had by the company in the original post start to evaporate when they dictate bathroom breaks, what shirt is being worn, etc. There's really not much to argue here. They don't get to pick the times (booked by the customer via the employer) the places (same) and the manner (as the article states) by which they complete their work. They are part time workers for janitorial service that solicits business online.

supercanuck 12y ago

Are there any Florida "Factors" that are directly contradictory of the IRS's 3 Common Law categories?

will_brown 12y ago
Not contradictory as far as I am aware. The IRS 20 factors: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ... Florida 10 factors, Keith v. News & Sun Sentinel Co., 667 So. 2d 167 (Supreme Court of Florida, 1995), for purposes of determining worker's comp eligibility: • The extent of control that the employer may exercise over the details of the work; • Whether or not the individual employed is engaged in a distinct occupation or business; • 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 employee or the worker 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 part of the regular business of the employer; • Whether or not the parties believe they are creating the relation of employer and employee; and • Whether the individual is or is not in business.