In Florida, qualifiers play a crucial role in ensuring that construction businesses operate within the law. While being a W2 employee remains the best practice for qualifiers who are not owners, recent changes to the Florida Administrative Code provide new alternatives.
Updated Rule: 61G4-15.0024 Supervision of Business Entities
The rule 61G4-15.0024 outlines the requirements for demonstrating an applicant’s ability to supervise a business entity. The following criteria are key:
- Ownership Stake: The applicant owns 20% or more of the business to be qualified.
- W2 Employment: The applicant is a W2 employee of the business to be qualified.
- Agreement Documentation: A joint venture or employment agreement that clearly defines how the applicant will control the construction work.
The recent amendment on May 5, 2024, emphasizes the importance of having an employment agreement that ensures the applicant’s control over the business operations.
Statutory Exemptions: Florida Statute 489.103
Florida Statute 489.103 outlines exemptions to the contractor licensing requirements, particularly noting that:
- Employee Exemption: Employees of a certificate holder or registrant are exempt when acting within the scope of the license held by the certificate holder or registrant. However, this exemption applies only if the employee is genuinely classified as such, meeting specific criteria, including F.I.C.A. and withholding tax deductions, and receiving workers’ compensation.
The statute’s definition of an “employee” tracks closely with the requirements for W2 employees, underscoring the necessity for proper classification and compliance with employment laws.
The Benefits of W2 Employment
- Legal Compliance: Ensures that the business meets all statutory and regulatory requirements, avoiding legal complications.
- Control and Supervision: Allows the qualifier to have direct control and oversight of the business’s construction activities, as mandated by law.
- Liability Protection: Provides a clear legal framework that protects both the business and the qualifier, particularly through indemnification provisions included in the Qualifier Agreement.
Exploring Alternatives
The recent changes in the administrative code provide flexibility for businesses and qualifiers:
- Joint Venture Agreements: These agreements can now be used to meet the requirement for controlling construction work.
- Detailed Employment Agreements: An employment agreement that explicitly establishes the methods for control over construction work can serve as an alternative to W2 employment.
Conclusion
While being a W2 employee is still the gold standard for qualifiers, the updated administrative code offers viable alternatives that can meet legal requirements and provide necessary protections. At Douglas Firm, we specialize in crafting tailored Qualifier Agreements that align with the latest regulatory changes and ensure robust protection for your business.