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Labor & Employment law - Employers only

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:

the extent of control which, by the agreement, the master may exercise over the details of the work;
whether or not the one employed is engaged in a distinct occupation or business;
the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
the skill required in the particular occupation;
whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
the length of time for which the person is employed;
the method of payment, whether by the time or by the job;
whether or not the work is a part of the regular business of the employer;
whether or not the parties believe they are creating the relation of master and servant; and
whether the principal is or is not in business.

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.

“Here, the parties’ agreement unequivocally disclaims an employer-employee relationship. And the parties' actual practice reflects the written contract. As the Department here found, ‘the central issue is the act of being available to accept requests’ and ‘[t]his control is entirely in the driver’s hands.’ Drivers supply their own vehicles—the most essential equipment for the work—and control whether, when, where, with whom, and how to accept and perform trip requests. Drivers are permitted to work at their own discretion, and Uber provides no direct supervision.

Further, Uber does not prohibit drivers from working for its direct competitors. Accordingly, we agree with the Department's assessment that, “[a]s a matter of common sense, it is hard to imagine many employers who would grant this level of autonomy to employees permitting work whenever the employee has a whim to work, demanding no particular work be done at all even if customers will go unserved, permitting just about any manner of customer interaction, permitting drivers to offer their own unfettered assessments of customers, engaging in no direct supervision, requiring only the most minimal conformity in the basic instrumentality of the job (the car), and permitting work for direct competitors.”

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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