Are You an Independent Contractor or an Employee?

A heavily litigated aspect of the overtime and minimum wage laws under the Fair Labor Standards Act (“FLSA”) is whether individuals are incorrectly classified as independent contractors instead of employees. If the individuals are, in fact, employees then they are entitled to minimum wage and overtime pay at a rate of time and one-half. The FLSA defines “employee” as “any individual employed by an employer,” and stipulates that an entity “employs” someone if it “suffers or permits [the individual] to work.” 29 U.S.C. § 203(e) (1).

To determine whether an individual is a protected employee or an unprotected independent contractor, courts look at the “economic reality” of the employment circumstances as a whole. This economic-reality inquiry turns on the following factors:

(1) the nature and degree of the alleged employer’s control as to the manner in which the work is to be performed;

(2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill;

(3) the alleged employee’s investment in equipment or materials required for his task, or his employment of workers;

(4) whether the service rendered requires a special skill;

(5) the degree of permanency and duration of the working relationship; and

(6) the extent to which the service rendered is an integral part of the alleged employer’s business.

No single factor is controlling. Courts look at the case as a whole. If your employer misclassifies you as an independent contractor, you could be entitled to significant back pay. Even if you signed an independent contractor agreement, you could still be considered an employee by the Courts and entitled to damages.

Does your employer: (1) set your schedule; (2) employer supervise your work; (3) threaten to terminate or punish you if you do not “accept” work for the day; (4) provide the tools to perform the job; or (5) essentially treat you like an employee? If so, you could be entitled to the recovery of unpaid wages, liquidated damages (“double damages”), and attorneys’ fees and costs.