In this episode, Rich Sierra, President of the Florida Small Business Legal Center, breaks down one of the most serious — and costly — mistakes business owners make: misclassifying employees and failing to pay wages properly.
Rich explains how treating workers as “independent contractors” when they are actually employees can trigger IRS audits, back wage claims, and even personal liability under the Fair Labor Standards Act (FLSA) and Florida law. He also provides actionable steps business owners can take to stay compliant and protect their company from lawsuits.
🧩 Key Topics Covered
1. Employee vs. Independent Contractor
Legal definitions under the IRS control test and economic realities test.
Common misclassification red flags — supervision, tools, schedules, and payment structure.
Why intent doesn’t matter: how courts look at actual working relationships.
2. The Cost of Misclassification
Financial penalties, back pay, and lost tax deductions.
Double exposure — both federal (IRS & DOL) and state (Florida Department of Revenue) audits.
The impact on employee morale and your company’s reputation.
3. Unpaid Wage Claims
Under FLSA, owners and managers can be personally liable for unpaid wages.
Florida’s wage claim process allows recovery of attorney’s fees and double damages.
The importance of accurate timekeeping and compliance with overtime rules.
4. How to Stay Compliant
Conduct classification audits.
Use written contractor agreements aligned with legal standards.
Maintain separate 1099 and payroll documentation.
Review exemptions and overtime eligibility regularly.
Consider Employment Practices Liability Insurance (EPLI) for coverage.
💬 Takeaway Quote
“When in doubt — classify them as employees. It’s safer, and it protects your business from devastating financial exposure.”
— Rich Sierra, Esq.
🔗 Resources Mentioned
Fair Labor Standards Act (FLSA): https://www.dol.gov/agencies/whd/flsa
Florida Department of Revenue: https://floridarevenue.com/
📞 How to Contact Rich Sierra
📧 Email: [email protected]
🌐 Website: FloridaSmallBusinessLegalCenter.com
📱 Facebook: @FSBLEGAL
📺 YouTube: @RichardSierra
🐦 Twitter/X: @Rich_Sierra
📸 Instagram: @FSBLEGAL
💼 Digital Business Card: https://poplme.co/hash/Qd9D1azj/1/s
📘 Business SOS! Eight Common Legal Mistakes Business Owners Make and How to Avoid Them
Available now on Amazon, Barnes & Noble, or ask for it at your local bookstore.