William “Bill” C. Davell: More Sand in the Gears of Independent Contractor Relationships: What You Need to Know

The Good News provides a monthly column with important content having to do with topics from the legal community. This month Bill Davell, director, speaks with Paul Lopez, COO and a director at Tripp Scott Law Firm.

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Here we go again.

The relationship between employers and independent contractors has always represented a fine balance between harmony and friction. “Gig” workers experience sometimes uneven workflows but inherent freedom. Companies who contract with them access a skilled workforce without the need for benefits or other financial and legal commitments – if the independent status is not challenged.

But now sand is getting thrown in the gears again. The Trump administration Department of Labor is reversing the Biden administration’s reversal of its first-term proposal to simplify independent contractor determinations. Meanwhile, a recent lawsuit in a California court demonstrates the complexity caused by overlapping federal and state legislation, as a Meta-owned startup is charged with misclassification of tech workers who “train” artificial intelligence models in violation of a Golden State statute. 

Bill Davell: What are the benefits of independent status for workers and the companies who engage them?

Paul Lopez: Many freelancers, like those in IT development and ride-hailing and food-delivery services, for example, seek to preserve their independent status for the flexibility and autonomy it provides. Surveys consistently find a vast majority of current contract workers prefer to be classified as independent.

Companies, for their part, may classify workers as independent contractors to reduce payroll taxes, overtime obligations, unemployment insurance, workers’ compensation costs and employee benefits.

All in all, around 14% of the U.S. workforce is self-employed and 72 million Americans, or about 45% of the U.S. workforce, performed some form of independent or freelance work in 2024.

BD: Workers and businesses seem to be in harmony on independent status. So where does the friction come in for those who engage independent contractors?

PL: Some workers, regulators and especially labor advocates have long argued that given the nature of the relationship, many independent contractors should actually be classified as employees under federal and/or state law and, therefore, eligible for benefits, overtime and expense reimbursements. Noncompete agreements, intellectual property ownership, tax liability and workplace discrimination protections may also be at issue.

The rise of and reliance on the gig economy has intensified these conflicts, prompting some states and, depending on who is in power, federal agencies to adopt or propose stricter tests for determining employment status. Employers also face lawsuits alleging contractor misclassification, which can result in back pay, tax penalties and fines.

BD: What are the tests for independent contractors?

PL: At the federal level, the Supreme Court has interpreted the Fair Labor Standards Act of 1938 by establishing an “economic reality test” involving six factors:

• The worker’s opportunity for profit or loss 

• Employer control over work performance scheduling
• The worker’s investments in equipment and materials relative to the employer’s
• Duration and exclusivity of the working relationship
• Whether the service performed is a core part of the employer’s primary business
• Whether the worker uses specialized skills and independent business initiative.

The state of Florida has its own tests for tax and other purposes that revolve around 10 separate “common-law” factors, many of them similar, as laid out by the Department of Revenue.

BD: What’s going on with these tests at the federal and state level?

PL: The first Trump administration attempted to simplify the analysis of independent contractor status by focusing on a determination of the first two, or “core,” factors, before moving on to the others. The Biden administration rescinded the rule and restored an equal weighting of the tests, but the current administration is seeking a return to its earlier proposal. The comment period for the new Trump-era rule has been completed, but the rule hasn’t been finalized.

Further complicating worker status are scores of employment and tax statutes and regulations 

regarding this classification at the state level, including the statute that gave rise to the Meta suit. 

BD: Can’t companies and workers simply agree contractually to establish independent contractor status?

PL: Unfortunately, commonly used independent contractor agreements often do little to insulate employers from legal liability under regulations or in the face of lawsuits. All that matters is whether the relationship meets the Department of Labor’s or a given states’ latest qualifiers, and with shifting and duplicative political and regulatory sands flying into the gears of commerce, it’s hard to know at the moment where the line is drawn, much less overcome.

As the Trump rule and lawsuits both advance and remote work expands, businesses must carefully structure contractor relationships to comply with changing legal standards while maintaining that fine balance between harmony and friction when it comes to operational needs and worker expectations.

For that reason, organizations that use independent contractors would be well-advised to contact attorneys specializing in employment and tax law to see if these shifting sands could impact their businesses.

Over the years, Tripp Scott’s labor and employment lawyers have assisted clients with proactive guidance on compliance and claims involving independent contractors and a wide range of other compliance issues. You can reach us at 954-525-7500 or at www.trippscott.com/contact-us.

Paul Lopez is COO and a director at Broward-based Tripp Scott law firm, where he concentrates his practice on complex commercial and business litigation and labor and employment/HR issues.

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For more Good News, read the GOOD NEWS September 2026 Issue at: https://digital.goodnewsfl.org/2026/september/