Santiago J. Padilla, P.A.

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Located in the Miami metropolitan area, the Law Offices of Santiago J. Padilla, P.A., offers comprehensive services for business clients with a variety of needs.

What Is The Difference Between an Employee and Independent Contractor?

Are you starting a business and trying to determine whether to hire employees or independent contractors? While some aspects of the two roles can look similar, there are key differences to each. Hiring an independent contractor who should be an employee can be a costly mistake. The lawyers of the Law Offices of Santiago J Padilla focus on employment law and can draft an employment agreement that clearly defines the structure of your business agreements. But first, here are some characteristics that differentiate one role from the other.

What Is an Independent Contractor?

There are three general factors that define whether someone is an employee versus an independent contractor. The analysis involves a review of the facts of each case. Both the Internal Revenue Service and the courts have helped to underpin these factors through taxation and legal decisions, which are primarily guided by the nature of the relationship and degrees of control.

The Nature of the Relationship

The dependence of the individual upon the employer for which they work largely qualifies the nature of the relationship. Multiple criteria determine dependence. These questions are not all-inclusive, but they can help you clarify the needs of the business, the nature of work and the relationship with the worker, which dictate dependence.

  • Is the individual or the type of work itself integral to the business in terms of operations, profit, etc.?
  • Is the role a permanent one?
  • Will the individual be eligible for benefits such as insurance and retirement?
  • Does the individual receive the majority of their salary from the business?

Degrees of Control

The degree to which the employer or individual has varying levels of control determines employment status. Control can be regarding behavior and finances. Here are important questions you need to ask to determine which controls, and to what degree, are in place to help determine employment status.

Behavioral Control Questions

Does the employer or individual control:

  • The autonomy of the work?
  • The hours of work and schedule?
  • How is work to be done?
  • What tools or equipment will be used and who provides them?
  • What type of skill is required for the completion of tasks?

Financial Control Questions

Does the employer or individual control:

  • Whether the individual may work for multiple businesses?
  • How and when the worker is to be paid?
  • Whether the individual may incur a profit or a loss from their work?
  • Ownership of tax liability?

If the business holds control over the individual and the work, the individual is likely an employee. If the individual has control, he or she is likely an independent contractor.

Florida Law and Jobs

Both Florida and federal laws require employer payment of taxes. Determining employment status is necessary to identify who carries the onus of financial liability. Employers are responsible for withholding state and federal unemployment taxes for their employees as well as social security taxes and premiums to the state for worker's compensation and disability.

For independent contractors, the employer pays no such taxes. Since no taxes are withheld from an individual contractor's payment, the contractor carries the full weight for tax obligations and liability. The IRS can fine employers who incorrectly label employees as independent contractors in addition to owing back taxes.

Employment Attorney in Florida

Unwelcome surprises, especially avoidable ones by the IRS, are no fun. In order to avoid headaches down the road, it is important to correctly define the nature of the working relationship in the

beginning. Santiago J Padilla is a trusted resource as an Employment attorney in Florida. He can help you answer these questions and draft an agreement that protects your personal and business interests. If you'd like to schedule a consultation, contact us today.

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