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Two Ways Florida Employers May Misclassify Employees

You may not consider the minute details about the relationship between your Florida business and the people who perform work for it, but there are important distinctions stakeholders need to know. Under the Fair Labor Standards Act (FLSA) and many other federal and state employment statutes, the way you classify someone in the work environment is critical. Your treatment of these individuals could trigger laws and regulations covering wage and hour issues, workers’ compensation, unemployment, overtime, and many others.

As such, your treatment of people who work for you could also lead to adverse consequences if you misclassify them. Your company could be exposed to penalties, employment disputes, and costly litigation for not complying with the applicable laws. It is crucial to consult with a Clearwater business law attorney who will see that the reality of the business relationship aligns with your intentions regarding classification. Some basics about the two ways Florida business owners misclassify workers is useful.

Independent Contractor v. Employee

The first important distinction is whether someone is working for you as a true employee of the company or an independent contractor. Issuing a W-2 or 1099 is not the defining factor. It is the reality of the business relationship that separates the two, and the critical factors include:

  • Who has the right to control the work and how tasks are performed;
  • Whether the company provides tools, materials, or other supplies;
  • How the person is paid, such as a salary or wage versus by the completed project;
  • Whether the individual receives any perks or benefits associated with employment; and,
  • The continuity and duration of the business relationship.

When more of these factors are under control of the company, it is likely the relationship will be considered an employer-employee.

Exempt v. Nonexempt Employees

Even when there is no question about employee status, business owners still need to be concerned with exemptions. The reason is FLSA requirements on payment of overtime: Nonexempt employees MUST be eligible and exempt employees do NOT need to be paid overtime for working more than 40 hours a week. A Florida business lawyer can explain the two criteria:

Wages: This aspect of classification is straightforward and based upon dollar value. The laws establish a minimum pay threshold, which is $684 per week or $35,568 per year. Anyone making above this amount is exempt.

Job Duties: The employee’s job responsibilities and role within the company are also a factor, so those in certain positions are exempt. Examples include executives, administrative employees, outside sales reps, and computer workers.

A Clearwater, FL Business Law Attorney Can Advise You on Employment Disputes

This overview helps you understand the risks of misclassification, but you should trust a business lawyer to ensure that the lines are clear with how you treat workers. For additional details, please call Clearwater Business Law at (727) 785-5100 to set up a consultation. Our office serves clients in Pinellas County and the surrounding region in a range of business, contract, and corporate law matters, so we are happy to advise.