Kim Vaughan Lerner LLP Addresses the Pitfalls of Using Independent Contractors in Lieu of Employees

Share Article

Too many businesses are finding themselves penny wise and pound foolish, as the IRS, Labor Department and state governments work together to crack down on those that are misclassifying the status of their workers. In light of the recent case of Jorge Contreras v. Aventura Limousine & Transportation Service, Inc., Kim Vaughan Lerner LLP (kvllaw.com), a business and employment litigation law firm, warns businesses of the pitfalls of using independent contractors in lieu of employees.

Kim Vaughan Lerner LLP

Even workers who accept their pay and sign contracts as independent contractors can still sue claiming they are really employees. Signing a contract does not prevent the worker from suing and winning.

Past News Releases

RSS

With the increasing costs of affordable health care and the rising tide of minimum wage, many companies are considering the idea of converting employees to independent contractors or simply hiring independent contractors in lieu of employees.  The Affordable Care Act (referred to as “Obamacare”) requires certain employers to provide their employees with health insurance or money that can be used to buy health insurance. Some companies may consider re-classifying an employee as an independent contractor in order to avoid having to either provide health insurance under the law or pay overtime. Such attempts to be penny wise will result in being pound foolish according to Kim Vaughan Lerner LLP Partner Brian L. Lerner. If the individual has been misclassified, the penalties are severe. 

According to a recent Forbes article, “Disputes are common, and many different agencies can second-guess your decision. There’s the IRS, state tax authorities, labor departments, and insurance companies. All of them scrutinize the status of workers. Even workers who accept their pay and sign contracts as independent contractors can still sue claiming they are really employees. Signing a contract does not prevent the worker from suing and winning.”

In the recent case of Jorge Contreras v. Aventura Limousine & Transportation Service, Inc. (Case #13-22425), Kim Vaughan Lerner LLP successfully represented Jorge Contreras, a limousine driver that the company had called an independent contractor.  As an independent contractor, the Fair Labor Standards Act provides that an employer does not have to pay the worker overtime wages. According to the court documents (U.S. District Court for the Southern District of Florida), the jury found Contreras to be an employee, which entitled him to several thousand hours of overtime. The jury reached this verdict even though Contreras signed a document saying that he was an independent contractor. In all, the jury awarded Contreras $104,000, and the court imposed a liquidated damages penalty entitling Contreras to another $104,000, for a total of $208,000.

At trial, the company argued that its classification was proper because the IRS and the state tax authority approved the classification.  Even so, the jury still found Contreras to be an employee because the Fair Labor Standards Act applied a different standard than used by tax authorities.  “The lesson learned here is that there are many methods that apply and both businesses and individuals need to make sure that they are covered under all of those methods. Relying on just one method may not protect one from liability and can end up costing far more in the long term than what is saved in the short term,” said Brian L. Lerner.

Kim Vaughan Lerner LLP is a business litigation firm currently in its tenth year of successfully representing clients with a range of legal concerns in the South Florida area. The firm focuses on business disputes faced by companies and individuals and offers cost-efficient and results-oriented legal counsel for business problems, including contract disputes, insurance-related claims, employment disputes, trade secret disputes, international dispute resolution, officer and director disputes, as well as construction claims, among others.

The firm’s partners are Jay Kim, Robert C.L. Vaughan, and Brian L. Lerner, all of whom have extensive experience in litigating and resolving commercial disputes and are peer-review rated "AV," the highest rating by Martindale-Hubbell.

For more information or to schedule a consultation, please call 954.527.1115. Kim Vaughan Lerner LLP is located at One Financial Plaza, 100 SE Third Avenue, Suite 2001, Fort Lauderdale, Florida 33394.

About Kim Vaughan Lerner LLP
Kim Vaughan Lerner LLP is a minority-owned business and a certified minority business enterprise established in 2005 in Fort Lauderdale, Florida. The firm focuses on business disputes faced by companies and individuals.

About NALA™
The NALA is a full-service marketing agency providing custom personalized service for small and medium businesses throughout the United States.  

PR Contact: Tiffani Tendell
ttendell(at)thenala(dot)com,
805.650.6121, ext. 361

Share article on socal media or email:

View article via:

Pdf Print

Contact Author

Tiffani Tendell
Executive Business Services (theNALA)
+1 8056506121 Ext: 361
Email >