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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

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...
  - gwy 12y ago
    Just to add some actual cases, there was the $6.5 million settlement by Lowe’s Home Centers as well as a FedEx Ground case, where the idea of "1099ing an LLC" did not protect them. "Recently, the U.S. Court of Appeals for the Ninth Circuit and the Kansas Supreme Court both held that FedEx Ground had misclassified employees as independent contractors who were operating as business entities or subcontracted additional routes to other drivers." http://independentcontractorcompliance.com/2015/01/14/four-lessons/ http://independentcontractorcompliance.com/2015/01/14/four-l...

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...
- gwy 12y ago
  Just to add some actual cases, there was the $6.5 million settlement by Lowe’s Home Centers as well as a FedEx Ground case, where the idea of "1099ing an LLC" did not protect them. "Recently, the U.S. Court of Appeals for the Ninth Circuit and the Kansas Supreme Court both held that FedEx Ground had misclassified employees as independent contractors who were operating as business entities or subcontracted additional routes to other drivers." http://independentcontractorcompliance.com/2015/01/14/four-lessons/ http://independentcontractorcompliance.com/2015/01/14/four-l...