Calling a worker an independent contractor instead of an employee creates legal and financial problems. Both businesses and workers need to understand the rules to follow Florida and federal laws. Whether a worker is an employee or contractor determines their pay, benefits, and legal rights.
Penalties for businesses
Businesses that misclassify employees face serious consequences. The U.S. Department of Labor (DOL) and the Florida Department of Revenue issue fines, require businesses to pay missing wages, and collect unpaid taxes. Employers must pay extra for Social Security, Medicare, and unemployment benefits. If a company misclassifies workers on purpose, authorities can charge them with breaking tax or wage laws.
What workers lose
Workers labeled as independent contractors lose important benefits. Employees receive minimum wage, overtime pay, and workers’ compensation, but independent contractors do not. Contractors also miss out on company health insurance, retirement plans, and job-protected leave under the Family and Medical Leave Act (FMLA). Workers who experience misclassification can claim lost wages and benefits.
Workplace rights and responsibilities
A worker’s classification affects their rights. Employees receive protections under the Fair Labor Standards Act (FLSA) and Florida labor laws. They can form unions and receive protection from unfair termination. Independent contractors control their work but must manage their own taxes, insurance, and expenses. Misclassification creates confusion about workplace rights.
Fixing misclassification problems
Workers who believe their classification is incorrect can file a complaint with the DOL or the Florida Department of Economic Opportunity. These agencies review job duties, employer control, and other details. Businesses that misclassify workers must correct the mistake and pay any missing wages or taxes.