An independent contractor agreement Florida is important if you are not an employee of a company, but are instead working as a freelancer or self-employed worker with the company as your client. It is critical to know whether you are an employee or contractor because it affects your eligibility for benefits such as pensions and workers' compensation and wage requirements.

Although federal law covers most issues related to independent contractors, state law governs others, like workers' compensation, minimum wages, unemployment taxes, just to name a few. Therefore, you need to understand the specific laws for Florida workers.

Differences Between Contractors and Employees

One of the most important differences between employees and independent contractors is that the employer has no right to control the means or method with which the work is done. They can only control the acceptability of the work itself. This is typically the defining element to determine a worker's status as an employee or contractor.

Independent contractors are frequently hired when there is special work that needs to be done that is not part of the employer's usual business, or when there is more work to do than their current employees can handle. They are only brought in for that work period; they are not permanent.

Independent contractors have significant differences from employees:

  • They are responsible for paying their own taxes on income earned. Employers do not pay employment taxes or withhold taxes on their paychecks.
  • They are not eligible for company benefits that employees receive such as health insurance or retirement plans.
  • They do not receive unemployment benefits.
  • They are not subject to any laws regarding discriminations, wages, or hours worked.

Using an independent contractor is beneficial for employers. However, employers may encounter problems if workers who are really employees are instead treated as independent contractors.

How the IRS Determines Contractor vs. Employee Status

The IRS has its own rules about who is considered an employee and who is an independent contractor:

  • Employers typically do not train independent contractors. Contractors already have the skills needed when they are engaged to begin work.
  • Employees must follow employers' instructions about how, when, and where job duties are to be done, while a contractor may set their own hours of work, decides how the job will be completed, and may even work from home, depending on the type of work to be done.
  • Employees perform services that are part of the company's core business operations.
  • Independent contractors may be able to hire, supervise, and pay assistants to perform a specific job.
  • Employees have an ongoing relationship with their employers, while independent contractors are considered temporary, with the work being done during a specific time.
  • Even if an independent contractor does a job regularly, such as yearly or monthly, this does not create the same ongoing relationship on a daily basis between employees and employers.
  • Employees are expected to keep regular, set hours of work, while independent contractors can set their own hours as long as the work is done by the time it is expected.
  • An independent contractor may be doing work for more than one client and is free to take on any work they want to, whereas an employee works for just one employer.
  • Employees may need to turn in reports to their employers, and contractors do not typically do so.
  • Employees are usually paid by the hour, week, or month, while contractors are often paid by the job.
  • Independent contractors are usually responsible for their own expenses they incur while doing business, such as travel, equipment, and supplies. These costs are figured into the entire cost of the job, while employees' expenses are reimbursed on an itemized basis.

Are Telecommuters Independent Contractors?

Employees typically work on the company premises, while independent contractors may be able to do the work at any location they desire, depending on the work to be performed. However, some employees are telecommuters, so this is not a good means of determining whether an individual is an employee or a contractor. If a worker does their job from home or another remote location, other issues are considered, such as whether the individual is directly supervised about how and when the work is done or if they are able to follow their own work pattern.

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