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Decision to reclassify workers may lead to business litigation

Decision to reclassify workers may lead to business litigation

Many a business man or woman in Florida and elsewhere has come up with the brainstorm idea of changing employees into independent contractors to avoid the hassle, expense and drain of resources for payroll, insurance and other costs. But it may be a very expensive and counter-productive idea, especially if the employees fight the attempt. This kind of controversy could lead to years of business litigation with the labor force of the company.

This sometimes comes up in companies that have drivers who deliver packages or other merchandise. Some large companies may have succeeded in making such a transition, but it’s far from a sure thing and it clearly going to be the exception rather than the rule. A reclassification effort must be looked at closely by business attorneys and tax experts prior to taking any steps.

What could have seemed like an easy concept may turn out to look like warmed over beans after a few years of litigation with employee groups. Class action proceedings are also a popular way for a group of employees to litigate employment issues on behalf of similarly situated workers in the company. Also, class action attorneys can be accommodating in working on such cases without getting compensation up front.

One problem is that it’s not always easy to determine whether workers are employees or independent contractors. One thing is for sure: when in doubt, courts and tax collectors will err on the side of calling it an employment relationship. The key issue often boils down to control: does the employer control the work output, the schedules, the manner of performing the job and other key indicators of employer control.

If so, there is no way to succeed in reclassifying employees to be independent contractors. When a company in Florida or elsewhere has little patience or resources to get involved in protracted business litigation with its own work force, the issue of reclassification should be put aside. At least, that’s true when the factors are not clearly and demonstrably in favor of contractor status.

Source:, “Converting employees into contractors? Prepare for expensive, protracted litigation“, Jan. 13, 2015

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