Virtual workers are becoming increasingly commonplace particularly now that technology enables people to work from any locale. With popular sites such as oDesk or Elance, employers can easily find virtual workers to complete minor or major projects.
As an employer, there are certain legal aspects you should consider when hiring virtual workers. For instance, it is important that you properly classify your workers as employees or independent contractors for financial and liability purposes.
In addition to classifying employees, you need an agreement that extensively describers the employment terms and conditions. Read on to learn more about properly classifying the employment status of virtual workers and drafting employment and independent contractor agreements that protect your business interests.
Employee or Independent Contractor?
You should have an employment or independent contractor agreement in place before you hire a virtual worker and it should clearly define if you are hiring an independent contractor, or an employee.
In Florida, the general rule is that an individual is an independent contractor if the employer has a right to control or direct only the result of the work and not the means and methods of accomplishing the result. There are three main ways to distinguish between an employee and a independent contractor:
1. Behavioral Control
An employee is subject to the business’ instructions about when, where, and how to work. Basically, the employer instructs the employee on the location in which the work will be conducted, the hours of work, and how the work must be completed.
An independent contractor can set their own parameters regarding how the work will be done.
2. Financial Control
A business is generally able to control the financial aspects of an employee. An employee receives a paid salary for performing specific job duties. An independent contractor generally invoices the employer and has control over their own business profits and losses.
3. Relationship Type
The last factor addresses how the parties perceive the relationship. If there is a continuing relationship between the worker and the person for whom the services are performed, then that indicates an employer-employee relationship.
Note, the misclassification of an individual as an independent contractor may have various (and costly) legal consequences. For instance, if your independent contractor is in fact an employee, then you may be responsible for the following:
- Reimbursement of wages under the Fair Labor Standards Act (overtime and minimum wage).
- The payment of back federal and state taxes and penalties.
- Costs pertaining to worker’s compensation claims.
Scope of Work
Regardless if you hire an independent contractor or employee, you want to make sure the agreement clearly defines the scope of work. An employment contract will require an extensive amount of detail pertaining to the scope of work. Here at The Law Office of Brandon Woodward, P.A., we can help you write this contract so your business is fully protected.
The agreement should clearly define how payment will be rendered. For instance, if you are paying an independent contractor, then your agreement may state that payment will be tendered upon receiving an invoice from the party after the final completion of the project. For an employee, you will have to specify a bi-weekly or monthly payment term under Florida law.
Length of Agreement
As mentioned above, employees tend to work for long periods of time. Therefore, you should designate a time period in which the virtual employment will last.
The Law Office of Brandon Woodward P.A. is eternally grateful that you have visited our web site or read our blog. The materials and information contained here are provided for informational purposes only and are not to be considered as legal advice. For questions about employment law, contracts, cash flow, collections, contracts and their affect on your business, or any other legal issues facing your business, EMAIL US, and we’ll give you a totally FREE consultation.