Independent Contractor v. Employee: What are the Ramifications?

Our Boca Raton contract lawyer discusses independent contractors in this blog.

If you’re an operating business or an employer you’ll eventually need to hire help. You may need an individual or another entity to provide you with certain services or goods on an ongoing basis. There are obvious benefits to hiring someone to help run or service your business, such as greater efficiency, faster production, and lower long term costs. But, should you choose to hire help you could be faced with the prospect of more liability exposure.

What if the person or entity you hire causes injury to a third party? Will you be liable to that third party as well?

This question invokes the law of principal-agent liability. Generally, a principal is not vicariously liable for the negligence of its independent contractor. But the principal is liable for the negligence of its agent or employee. As a general matter, if you hire someone as an “independent contractor” you are not generally liable for the acts or omissions of this person. Accordingly, as a business, you could significantly reduce your potential liability exposure if you hire an individual as an independent contractor.

According to the courts in Florida, whether or not an individual is an independent contractor or employee/agent of your business is generally a question of fact. Notably, the most important factor which the courts examine in making this determination turns on the question of control. More particularly, it is the right of control, and not actual control, which determines the relationship between the parties.

To get even deeper, it is the manner of control which is critical in assessing whether someone is an independent contractor. The court will examine whether the employer’s control over the individual is exercised over the “results to be obtained” or the “means to be employed”. Control exercised by the employer over the individual that is directed toward the “means” points to an employment relationship. In contrast, control which is directed toward the “results” of the individual’s work points to an independent contractor relationship. Harper ex. rel. Daley v. Toler, 884 So.2d 1124 (Fla. 2 nd DCA 2004).
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The Florida Supreme Court has adopted a nonexclusive list of factors to assist a court in rendering a judgment on whether an individual is deemed an agent or independent contractor for vicarious liability purposes. This list of factors is set forth, for instance, in the Toler case cited above. As pointed out earlier, the court’s decision on the nature of the employment relationship rests heavily on the specific facts of each case.

That being said, an employer has some level of control over its set of circumstances. In particular, the employer can take affirmative action to help insulate itself from potential liability by utilizing an agreement which endeavors to create the status of an independent contractor relationship.

If there is such an agreement in place, the courts would initially look to the agreement itself to determine whether the parties had created an independent contractor relationship. However, even if the parties intend to create an independent contractor relationship under an agreement, a court may not be persuaded by such expressed intention if other provisions of the agreement, or the parties’ actual practice, belie the intended status created by the parties. What all this means is that, as an employer, you should make sure that any written agreement which serves to create an independent contractor relationship is crafted with care. If it is not, you may unwittingly establish an employer-agent relationship that could subject your business to greater liability exposure.

For this reason, it is important to consult a trained business attorney to handle your drafting needs. If you need to prepare or review a contract, or if you are involved in a contract dispute, please call Boca Raton-West Palm Beach attorney Joe Rosen for your legal needs.

Filed under: Florida Business

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