Is it more likely that a worker is an independent contractor if the business relationship is facilitated by a smartphone app?
A Florida Appellate Court recently gave employers some guidance on this issue.
A former Uber driver, violated one of Uber’s policies and Uber revoked the driver’s access to the app. The driver filed for unemployment compensation (now called reemployment assistance). The Parties disagreed on whether the driver was an “employee” or an “independent contractor” and that was decided by Florida’s Third District Court of Appeals. McGillis v. Dep’t of Econ. Opportunity, 2017 Fla. App. LEXIS 1114 (Fla. 3d DCA 2017).
Why does it matter whether the driver is an employee or independent contractor? Because if a worker is an independent contractor, then he is not entitled to reemployment assistance. Unfortunately, determining whether a worker is an “employee” or an “independent contractor” is complicated because different tests are used by different Florida State and federal agencies. As an example, the IRS uses a “Twenty Factor” test, the Department of Labor uses an “economic realities” test, some agencies use an “ABC” test.
This particular case uses the unusual common law rules applicable under Florida’s Reemployment Assistance law (Fla. Stat. §443). This means that to determine whether an individual is an employee or independent contractor, Florida law requires courts to initially look to the parties’ agreement. If language in the contract disclaims an employer-employee relationship in favor of independent contractor status, courts honor that provision unless other provisions of the agreement, or the parties’ actual practice, demonstrate that it is not a valid indicator of status. This means that independent contractor or employee status does not depend on the statements of the parties but upon all the circumstances of their dealings with each other.
Therefore, Florida courts consider the following ten factors:
Among these ten factors, the “extent of control” is recognized by Florida courts as the most important factor in determining whether a person is an employee or independent contractor.
In this case, the 3rd District Court of Appeal agreed with the Department of Economic opportunity’s conclusion that Uber drivers are not employees for purposes of reemployment assistance. The Court explained its reasoning, which can give other Florida employers guidance.
The Court also noted that in this case Uber sends each driver a Form 1099—an IRS form used to report payments to independent contractors. Also, Uber does not provide fringe benefits, such as medical insurance, vacation pay, or retirement pay.
Therefore, the Court determined that Uber and the driver contractually agreed that the driver’s work did not make him an employee, and a review of the parties’ working relationship confirmed this understanding. “Due in large part to the transformative nature of the internet and smartphones, Uber drivers … decide whether, when, where, with whom, and how to provide rides using Uber’s computer programs. This level of free agency is incompatible with the control to which a traditional employee is subject.”
This case reminds Florida employers of the importance of considering all the circumstances surrounding the relationship with a worker that you want to classify as an independent contractor. If you need assistance in reviewing these factors, contact the Law Office of David Miklas, P.A. or call us at 1-772-465-5111.
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