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The Dire Financial Consequences of Misclassifying Your Employees
In February of this year, a Florida appeals court upheld a decision by Gov. Rick Scott's administration that Uber drivers are independent contractors and not employees. In terms of the law, the decision was hardly revolutionary. It did, however, highlight the importance of properly classifying workers. Indeed, failure to properly classify workers can have staggering financial consequences for a business that operates on a model that relies heavily on a large number of independent contractors.
By way of example, pretend that the court in McGillis v. Department of Economic Opportunity had ruled against Uber's interests and found that its driver was an employee entitled to reemployment assistance under Florida Statutes Section 443.1216. 210 So.3d 220 (3d DCA 2017). This would, of course, mean also altering the facts of that case a bit. Like most courts analyzing the distinction between independent contractors and employees, the Third District Court of Appeals focused its analysis on the level of “control” exerted by Uber over its driver, i.e., “the right to direct what shall be done and how and when it shall be done.” On that point, the court held that while both independent contractors and employees are both subject to some control, Uber drivers, unlike employees, are free to decide the “means” used to achieve the “results.” If the court had found otherwise, Uber could have been subjected to some very serious financial penalties once everything was said and done.
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