FLORIDA REEMPLOYMENT TAX RATES FOR 2024 NOW AVAILABLE

With a few exceptions, Florida employers are required to pay a state reemployment tax (also called unemployment tax) on the wages paid to its employees. Reemployment tax is paid quarterly to the Florida Department of Revenue by filing a form RT-6 (Employers Quarterly Report).

Your business should have already received a notice in the mail from the Florida Department of Revenue with your company’s reemployment tax rate for calendar year 2024. This rate is applied to the wages paid to your employees each quarter to calculate how much reemployment tax you owe.

Reemployment tax forms must be sent and the taxes paid to the state no later than the end of the month following each calendar quarter. The first tax form and payment for calendar year 2024 is due April 30th and will be for wages paid to your employees in the first quarter of 2024.

Reemployment taxes are charged on only the first $7,000 of wages paid to an employee in a year. Once you have paid taxes on the first $7,000 of an employee’s wages for that year, you do not owe any more reemployment tax for that employee for the rest of the calendar year.

Unless you hire new employees during the year, your business will pay most of the tax due for the year in the first or second quarter and have little to no tax due in the later quarters of the year, but a reemployment tax return (RT-6) must be filed every quarter, even if no tax is due. If your business has 10 or more employees, you must file these tax returns and pay the tax due online using the Florida Department of Revenue’s secure portal.

SMALL BUSINESS SCAM ALERT

Please be cautious about emails or letters you get about your company’s required Annual Report filing. Because all companies in Florida have to file an Annual Report with the State of Florida each year, your company may get a solicitation from a private company offering to file the report on your behalf.

These solicitations may be from the “Business Filings Depot” or “Reminder Department.” They look like official government notices, but they are not from the State of Florida. 

If you pay one of these companies to file your Annual Report, it could cost up to $100 more than if you filed the report yourself. Filing directly with the state online at Sunbiz.org costs $150 for corporations and $138.75 for LLCs.

The deadline to file your company’s 2024 Annual Report is May 1st, but the state’s filing portal at Sunbiz.org is open now for early filing.

NEW RULES ON WHICH WORKERS ARE INDEPENDENT CONTRACTORS

Effective March 11, 2024, the United States Department of Labor will change the test businesses use to determine if a worker is an employee or an independent contractor. There are significant penalties for businesses that misclassify workers as independent contractors when they are actually employees, and employees who have been misclassified are entitled to receive their back wages.

Under the law, businesses are responsible for properly classifying their workers as either employees or independent contractors. If a worker is an employee, they are subject to minimum wage and overtime pay requirements. They are entitled to employee benefits like health insurance or paid time off, if offered by the business. Businesses must also pay payroll tax on their employees’ wages and must pay unemployment tax and workers’ compensation premium for employees.

Independent contractors, on the other hand, are not subject to these protections. They do not have payroll taxes deducted from their pay, and their pay is not subject to unemployment taxes or workers’ comp premium (with exceptions).

Whether a worker is an employee or an independent contractor is determined by looking at the nature of the worker’s relationship with the employer. If the worker is in business for themselves, the worker can be called an independent contractor. But the more economically dependent the worker is on the employer, the more the worker looks like an actual employee and not an independent contractor.

Simply calling a worker an independent contractor or paying a worker via 1099 or paying the worker off the books does not make them an independent contractor. Nor does having a worker sign an agreement to be an independent contractor. 

The new factors businesses must use to determine whether workers are in business for themselves (independent contractors) or economically dependent on the employer (employees) are:

  1. If a worker can earn profits or suffer losses through their own independent effort and decision making. Relevant facts include whether the worker negotiates their own pay, can choose to accept or decline work, hires their own workers, purchases material and equipment, or advertises their own work.
  2. The worker has made capital or entrepreneurial investments to increase their sales or number of clients. 
  3. The work is sporadic or project-based with a fixed ending date or regularly occurring fixed period of work, and the worker can make a business decision to take on multiple jobs. 
  4. The worker has control over how the work is performed and the economic aspects of the working relationship like hiring/firing workers, scheduling the work, and the price/rate charged for the work. 
  5. The degree to which the work being performed is critical, necessary, or central to the business. 
  6. The worker uses their own specialized skills together with business planning and effort to perform the work and support or grow a business. 

As of the date of this newsletter, these new factors have been challenged in court. It is possible that they will not take effect on March 11th. If not, businesses must continue using the current factors for determining whether their workers are employees or independent contractors. For more information, visit the Department of Labor’s website.