Employer mis-classification of workers as "independent contractors" is a scourge upon working people and the greater economy. Independent contractors do not enjoy workers' compensation or unemployment benefits, minimum wage protection, or overtime, and misclassification of employees as contractors provides an unfair competitive advantage against businesses who appropriately treat their workers as employees.
The Fair Labor Standards Act (which provides for the federal minimum wage and mandates overtime for hours worked in excess of 40 in a week) defines as an employee someone who the employer "suffers or permits" to work. This is an expansively broad definition, and one that should lead to the conclusion that most American workers are employees. Unfortunately, the abuse of contractor misclassification has become widespread.
As mentioned in a previous post, the Department of Labor has recently issued a new opinion that details and describes the appropriate factors for consideration of whether a worker has been misclassified as a contractor. Workers who routinely work over 40 hours a week, classified as "contractors" and denied overtime benefits may have a cause of action for back overtime wages (half of their hourly wage for every hour over 40 in a week, dating back at least two years) under the FLSA.
Courts use the "economic reality" test to determine whether a worker classified as a contractor is in fact an employee. The economic reality test focuses whether the worker is economically dependent on the employer or in business for him or herself. The factors to be considered in determining the economic realities of the employment relationship "typically include": (A) the extent to which the work performed is an integral part of the employer's business; (B) the worker's opportunity for profit or loss depending on his or her managerial skill; (C) the extent of the relative investments of the employer and the worker; (D) whether the work performed requires special skills and initiative; (E) the permanency of the relationship; and (F) the degree of control exercised or retained by the employer.
Examination of these factors leads to the inevitable conclusion that most workers should be treated as employees, with all attendant benefits and protections.
If you have a question about whether you are improperly classified as an independent contractor and may be owed back overtime pay, give us a call. The North Carolina employment law attorneys at Edelstein and Payne have extensive experience litigating unpaid overtime claims, including class action suits and representation of individuals. We offer free consultations on these cases, and are willing to consider a pure contingency fee for strong cases.