Misclassified independent contractors are owed overtime. Granite Masters Inc., a granite countertop installation company based in Suwanee, Georgia, will pay $105,020 in back wages and liquidated damages to 36 employees for violations of the overtime requirements of the Fair Labor Standards Act (FLSA). Granite Masters Inc. misclassified employees as independent contractors, paying straight time rates to overtime-eligible employees.
The overtime requirements of the FLSA apply to employees, but not to independent contractors. Some employers misclassify workers as independent contractors to avoid paying overtime. Independent contractors who work more than 40 hours in a single work week are paid straight time under such a scheme. Employees working overtime are entitled to 1 ½ times their Regular Rate of pay.
I. Who is an Independent Contractor?
It depends on all of the facts of the job, not what the worker is called. Even if the worker signs a written contract calling him/her an “independent contractor;” the worker may still be an employee entitled to overtime pay depending on the facts. Even if the worker receives an IRS 1099 form at the end of the year instead of a W-2 that employees receive; the totality of the facts control who is an employee for purposes of the FLSA overtime rules.
II. Who is Clearly an Independent Contractor?
This set of facts shows that the worker is pretty clearly an independent contractor:
I run a law firm. A toilet backs up and I call a plumber. The plumber is an independent contractor. The plumber can accept or reject the assignment. The plumber uses their own tools. The plumber is independently certified and licensed as a plumber apart from the job for me. I don’t direct, or inspect, or supervise the quality of the plumbing work. My law firm is not in the business of providing plumbing services. The plumber can control the profit on the job by working faster or slower, and choosing the steps used to correct the problem. The plumber is not economically dependent on my law firm for all of his/her business. The plumber works a number of jobs for other people. The plumber is most likely an independent contractor and not an employee.
III. Facts where the Plumber Is Likely My Employee.
This set of facts shows that the worker is pretty clearly an employee and not an independent contractor:
I run a company that builds houses. Part of the services that my Company provides is plumbing for the houses. The plumber works for me full time and does not advertise for other jobs or take other jobs. My construction supervisor directs which jobs the plumber works and schedules their time. The plumber is paid by the hour and doesn’t control the profit or loss on the plumbing part of the job. The plumber is paid the same whether they work fast or slow, or which steps are chosen to fix plumbing problems on the job. The construction supervisor inspects the quality of the plumber’s work. The plumber is completely dependent on my company for income and has worked for the company for a long time. The plumber uses tools that the company buys. The plumber is doing the same job as other plumbers that I treat as my employees. It would probably violate the FLSA for me to classify this worker as an independent contractor in order to avoid paying overtime.
IV. You May Still be an Employee and Not an Independent Contractor.
Lots of job situations have facts about the job that are not as clear cut in determining who is an employee and who is an independent contractor. If you are denied overtime pay an “independent contractor” it is important to keep these points in mind concerning the FLSA:
- Receiving a 1099 does not make you an independent contractor under the FLSA.
- Even if you are an independent contractor under another law (for example, tax law or state law), you may still be an employee under the FLSA. Laws governing unemployment benefits, or worker’s compensation benefits, or health insurance eligibility, may have different tests for who is an employee.
- Employers may not misclassify an employee for any reason, even if the employee agrees. The facts will control, not the job title or a written contract.
- You are not an independent contractor under the FLSA merely because you work offsite or from home with some flexibility over work hours.
- Whether you are paid by cash or by check, on the books or off, you may still be an employee under the FLSA.
- “Common industry practice” is not an excuse to misclassify you under the FLSA. Your mother was right: “Just because everyone does it; Doesn’t make it right.
V. Consult an Attorney.
If you are denied overtime pay because you are misclassified as an “independent contractor,” you are still entitled to overtime pay for over 40 work hours in a week. Check to make sure you keep a record of all time worked. All of this time counts toward the 40 hours in a work week.
The Ken S. Nugent, P.C. Overtime and Unpaid Wages team of attorneys can help you determine whether you are an employee instead of an “independent contractor.” Our team covers the entire state of Georgia. We have eight Georgia offices ready to protect workers in small town and rural areas who are being cheated on their earned overtime. We have an office with overtime attorneys near you: Albany, Atlanta, Augusta, Columbus, Duluth, Macon, Savannah, and Valdosta.
The Ken S. Nugent, P.C. Overtime and Unpaid Wages team of attorneys can help employees collect (1) back wages for all “Hours Worked” and any unpaid overtime, plus (2) liquidated damages in an additional amount of the same back wages and overtime, and (3) attorney’s fees and costs.