Recent posts have focused on outcomes from the 2018 Florida legislative session. The passage of CS/CS/HB 227 is discussed in I'm Just a Bill - PTSD in Florida (March 2018). The reform regarding opioids and the state's prescription drug monitoring program (PDMP) is discussed in Florida's 2018 Session - Opioids (March 2018). Admittedly, the 2018 session did not include significant workers' compensation reform. But, these two bills have notable workers' compensation implications.
And, they are not alone. House Bill 7087 (HB7087) could have workers' compensation implications as well. It is worthy of discussion. This is a taxation bill filed in February 2018. On March 5, 2018, the House passed the bill and it was sent to the Senate, "in messages." The Senate read the bill three times, the last on March 11, 2018. Afterward, an amendment was proposed, and adopted. The Senate sent the amended bill back to the House, which passed it. The bill was then "enrolled" (meaning it will be presented to the Governor). Some news coverage of the process was critical that the new statute sections created by the last-minute amendment "didn't go through the full committee process."
And, they are not alone. House Bill 7087 (HB7087) could have workers' compensation implications as well. It is worthy of discussion. This is a taxation bill filed in February 2018. On March 5, 2018, the House passed the bill and it was sent to the Senate, "in messages." The Senate read the bill three times, the last on March 11, 2018. Afterward, an amendment was proposed, and adopted. The Senate sent the amended bill back to the House, which passed it. The bill was then "enrolled" (meaning it will be presented to the Governor). Some news coverage of the process was critical that the new statute sections created by the last-minute amendment "didn't go through the full committee process."
The amendment creates "Chapter 451, Florida Statutes, consisting of sections 451.01 and 451.02. It defines terms like “household services” and “marketplace contractor” and “marketplace platform.” The implications for workers' compensation may not be immediately clear, but these "platforms" are computer applications (apps). As Uber and Grubhub are apps that connect drivers to customers, so do other apps ("marketplace platforms") connect customers to workers that perform tasks around the home.
According to the amendment, these tasks include:
(a) Furniture assembly; (b) Interior painting; (c) Television mounting; (d) Local moving help, such as packing, lifting, loading, and rearranging household items, but excluding transporting items; (e) Hanging pictures, mirrors, curtains, blinds, and shelves; (f) Home cleaning; (g) Installation of in-home technology that does not require a hardwired electrical connection; or (h) Installing or replacing door hardware.
The amendment clarifies that such services "do not include services that require licensure under chapter 489 (construction and other contracting)..
So, a customer can use an app (“marketplace platform”) to summon someone (“marketplace contractor”) to perform tasks (“household services”). But the reason this is of interest to the workers' compensation community is that such help (“marketplace contractor”) shall not be considered an employee of the app (“marketplace platform”).
The new law provides that
a marketplace contractor must be treated as an independent contractor, and not as an employee, of the marketplace platform for all purposes under state and local laws, regulations, and ordinances, including, but not limited to, chapters 440 and 443 . . .
as long as certain "conditions" are satisfied. The conditions are focused on the extent to which the “marketplace platform” exerts control over the worker (“marketplace contractor”). These include the platform not "unilaterally" setting hours the contractor "must be available" for work, not prohibiting the contractor from using other such platforms to seek jobs, and not restricting the "contractor from engaging in any other occupation or business." Furthermore, a written agreement between the platform and the contractor must specify the "contractor is an independent contractor." And, the contractor must be responsible for "all or substantially all" of the expenses associated with performing the services, and be responsible for his or her own income taxes.
The new statute compels that satisfaction of these criteria means that the contractor is an independent contractor and not an employee. However, the converse is not necessarily true under the new law. That is, failure to satisfy these statutory conditions does not mean that the contractor is instead necessarily an "employee." In other words, the "contractor" or "platform" may still rely on other criteria or statutory definitions to establish that the contractor is not an employee, e.g. Section 440.02(15)(d), F.S.
Further, the customers who need “household services” and seek them through the "marketplace platform and marketplace contractors" are required to "comply with chapter 440 in the same manner as if they had not connected through the marketplace platform." The use of the platform provides no special treatment for the customer/homeowner.
The new law's provisions apply to such app relationships prospectively (after the law becomes effective July 1, 2018). But, it specifically also "applies to services performed by a marketplace contractor before July 1, 2018, if the conditions set forth in subsection (1) were satisfied when the services were performed" (the requirements discussed above).
Finally, there are specific exclusions regarding services performed for the state, counties, cities, etc., and for services performed for "religious, charitable, educational, or other organization(s)." These services are excluded to the extent they are otherwise addressed in the Federal Unemployment Tax Act.
There has been significant discussion of the "gig economy," in which work is performed as needed or on a "project" basis. See The Gig Economy, Can it be Socialized (March 2018). That economy has existed for years with independent contractors being recognized in various statutory constructs across America. Disruptive technology has not created the "gig economy," but merely facilitated it. And, with the aid of technology, this market segment has gained notoriety, attention, and growth. Some have predicted that the government would struggle to keep pace with such changes. See Salim Ismail and a Life-Changing Seminar in Orlando (May 2015).
The issue with independent contractors is reasonably simple to understand. An independent contractor is someone operating her or his own business, doing work for various clients, and being responsible for her or his own tools, taxes, and work. The application of the concept has become muddled over the years as some employers and employees have sought to misuse the classification of independent contractors for the purpose of avoiding tax liability, the burdens of workers' compensation, and other costs. See Misclassification - What it is (January 2015). In response, some states have sought to tighten the definitions of independent contractors. Florida's statutory constraints are quite specific. See Section 440.02(15)(d), F.S.
The debate regarding classification in this context is not isolated to Florida nor to home repair. There has been a significant debate regarding worker status, as well as numerous court decisions involving various "apps." A Kansas court concluded that one company's workers were employees, while a District of Columbia court later concluded the same company's workers were not employees. In fairness, the two courts were considering different statutes.
A Florida court has concluded that Uber drivers are independent contractors. Reportedly, "New York, Texas, and Georgia" have reached similar conclusions. However, the same report notes California has labeled Uber workers "employees" instead. A Federal judge in California very recently reached a different conclusion regarding workers at a food delivery service, Grubhub. Some have asked me how California could treat Uber (rides for people) and Grubhub (rides for food) differently. No, the answer is not the character of the cargo! The difference is in how the company that owns the app interacts with the workers.
This should lead the reader to some pointed questions. Some might perceive inconsistency and wonder who is "right" or "wrong." That is not a helpful way to approach this issue. All of these decisions may be "right." Of course, it is equally possible that each is "wrong." This is possible because the determination of classification is dependent upon both the applicable law and the individual facts of the case.
A determination that some description of a worker is or is not an "employee" must be made by applying a particular law. Thus, it is possible that a person might be an "employee" as that is defined for purposes of collective bargaining, but is an "independent contractor" for the purposes of the Internal Revenue Code. It is as possible that either of these federal laws might lead to a different result on the classification question than some state laws might reach. It is notable that there are many definitions included in various laws, and they may not always be consistent.
Furthermore, these questions are not necessarily fully answered by the law. The law prescribes considerations and requirements. However, the facts may be very different from one situation to the next. Just because one "app" is seen as creating an "employee" relationship (such as Uber in California), that does not mean another "app" would be seen identically as another "app" in the same state (Grubhub in California). The distinction, according to the judge in the Grubhub decision, is the extent to which the "app," or more aptly the company that owns it, exerts control over the worker. The less control, the more likely a conclusion the worker is an independent contractor, and the more control may be persuasive of being an "employee."
The implications of all of this are broad. Independent contractors do not qualify for workers' compensation or unemployment compensation. The independent contractor does not have income tax or social security "withheld," but is responsible for making those payments her or himself. Contractors do not enjoy benefits like insurance, pensions, or paid holidays. Contractors are not assured a "minimum wage" under the Fair Labor Standards Act (FLSA). As a result, it may be cheaper to obtain services from an independent contractor than it is to "employ" someone to do the same tasks. When companies can find ways to lower expenses, they may find it is easier to compete for work, or easier to profit.
But, it is important to remember that "apps" and disruptive technology did not create either independent contractors or the "gig economy." Technology seems to be facilitating and nurturing both. These technology tools are shifting perceptions and performance of work. As a result, there are likely to be further discussions of adjusting laws to accommodate the realities that result. That may be to extend the applicability of workers' compensation, provide a substitute for workers' compensation (see The Gig Economy, Can it be Socialized (March 2018), or accept the societal burden of injury and illness through social programs instead of workers' compensation (see Someone has to Pay (May 2016).
Regardless, the new statute in Florida illustrates the efforts that are likely to be repeated as jurisdictions struggle with the economic realities and changes of the twenty-first century. But is it really change? Some will see such language as Section 451.02 as change, while others will see efforts like this as instead reaffirming the status quo. A Florida Senator asked about the new statute sections passing as a bill amendment, without committee consideration, responded to the Tampa Times that the amendment doesn't "change anything." Instead, the Senator explained, it merely reaffirms how workers affiliated with these “marketplace platforms” are characterized.
