Since construction projects rely on many specialized professionals to perform certain tasks, construction companies must ensure they are compliant with laws related to the classification of their workforce. As we discussed in the first part of this three-part series, when employers skirt employees’ taxes on Medicare, Social Security, unemployment, and workers’ compensation insurance, the government misses out on millions of dollars in revenue.
As a result, the Department of Labor (DOL) is cracking down on businesses that violate labor laws including worker misclassification. For construction businesses, this means that they may face fines in excess of hundreds of thousands of dollars if they are found deliberately violating these laws. If your construction business needs assistance with employment law, consult an experienced Jacksonville construction attorney.
Evaluating Your Workforce
Many employers aren’t aware of the labor laws pertaining to worker classifications like “employee” or “independent contractor.” Although construction business owners should always speak with an attorney about specific workers and how they should be classified, here are a few general rules to help determine if a worker is an employee or independent contractor:
- How Much Control Does the Employer Have? A key indicator in regard to classification as an independent contractor or an employee depends on the amount of control the employer has over their work responsibilities. If the employer has total authority to dictate the worker’s tasks, the worker is most likely considered an employee by law. If the worker can delegate their tasks as they see fit, they may have enough freedom to be considered an independent contractor.
- Can They Work on Other Projects? If the worker has the right to take on other projects with other employers or recruit their own clientele for their own profit, they are likely an independent contractor. If the worker is required to only provide service exclusively to the employer, they are considered an employee.
- Do They Have Their Own Resources? If the worker is required to bring their own tools, equipment, and gear to work, and they are compensated for this, they may be an independent contractor. If the worker is provided equipment, tools, and other job-related materials like a company phone or uniform, they are considered an employee.
There are many other factors that can determine how a worker is classified including the location in which they work, how they are compensated for their work, among other important items. It’s best to consult with an experienced construction lawyer that can closely assess the worker’s responsibilities and gauge the amount of control the employer has over these tasks.
Typically, if an employer controls when workers are required to work, what work they are required to perform, and they also own and provide the resources the workers utilize to perform this work, they are more than likely considered employees. Conversely, if a worker has a right to work on the projects they want to, can perform work on their own time, and has their own business operations, this would describe the role of an independent contractor.
To learn more about misclassification law in construction, please read part three.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.