Similar to the misclassification of salaried employees, employers also often misclassify their workers as independent contractors to avoid paying them overtime compensation, minimum wages, payroll taxes and unemployment insurance.
In order for the overtime and minimum wage laws to apply to a worker, a worker must be an “employee” and not an “independent contractor.” This means that an employment relationship exists between the worker and the employer. Generally, workers who are economically dependent on the business of the employer, regardless of skill level, are considered to be employees, and most workers are employees. On the other hand, independent contractors are workers with economic independence who are in business for themselves.
Although the Fair Labor Standards Act’s (FLSA) definition of “employee” is strikingly broad to favor concluding that a worker is actually an employee, courts still evaluate a number of factors when deciding whether the individual is an “independent contractor” (not entitled to overtime) or is actually an employee (entitled to overtime wages). Basically, courts look to see whether a worker, even if labeled as an “independent contractor,” is as a matter of “economic reality” an employee. Below, please find a brief analysis.
In the event you are labeled an independent contractor and have questions about whether you are misclassified and owed unpaid minimum and overtime wages, contact a federal and Ohio independent contractor attorney at Bryant Legal, LLC.
The FLSA requires that businesses pay workers for minimum and overtime wages even if the company labels you as an “independent contractor” when the worker’s duties follow the usual path of an employee. Courts in the Sixth Circuit (Ohio, Michigan, Kentucky, and Tennessee) use what is commonly referred to as the “economic realities” test to conclude whether the worker is actually an employee vs. an independent contractor. Under this test, courts consider six factors:
(1) the permanency of the relationship between the parties