Mansell Law Employment Attorneys » Are you really an Independent Contractor or “Exempt” from Overtime or Minimum Wage? Lawsuits for Misclassification soar in down economy.Mansell Law Employment Attorneys

Are you really an Independent Contractor or “Exempt” from Overtime or Minimum Wage? Lawsuits for Misclassification soar in down economy.

As of July 26, 2012, there have already been 60 more lawsuits (7,064 total) filed under the Fair Labor Standards Act (FLSA) than the entire year of 2011. FLSA Lawsuits Article.  The biggest increase in claims results from misclassifications.  The two major problems areas exist when (1) an employer classifies an individual as an independent contractor when the individual is really and employee, and (2) classifying an employee as “exempt” from minimum and overtime.  If you think you may be misclassified, check out the factors and links below.


The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.

The FLSA, however, provides an exemption from minimum wage and overtime pay for employees employed as bona fide executive, administrative, professionaloutside sales employees and certain computer employees.  To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. For more information on whether you are actually exempt, click here.

 Independent Contractor vs Employee

Employers are obligated to pay employees in accordance with the FLSA.  Employers may try to circumvent these obligations by calling an employee an independent contractor.

In the application of the FLSA an employee, as distinguished from a person who is engaged in a business of his or her own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves.

Among the factors which the Court has considered significant are:

1) The extent to which the services rendered are an integral part of the principal’s business.
2) The permanency of the relationship.
3) The amount of the alleged contractor’s investment in facilities and equipment.
4) The nature and degree of control by the principal.
5) The alleged contractor’s opportunities for profit and loss.
6) The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
7) The degree of independent business organization and operation.

If you think you are being misclassified, contact Mansell Law today.

3 Responses to Are you really an Independent Contractor or “Exempt” from Overtime or Minimum Wage? Lawsuits for Misclassification soar in down economy.

  1. Pingback: Do you make too much money to be entitled to Overtime under the FLSA? Information on the Highly Compensated Workers Exemption.

  2. Fabi says:

    If you are commissioned only and you are an emopeyle, not an independent contractor, then you have to get paid at least minimum wage. Usually the way companies do this is by paying you a draw against your commissions. If your commissions do not cover the draw, you still keep the draw money to satisfy the minimum wage requirement.

    • Lesang says:

      The life of a contractor is very tough to say the least. Why ctoorraoipns do it is beyond me because with NO notice, you could quit and pretty much leave that operation high dry.In terms of unemployment, there’s nothing you can do because you’re not employed by either the company or the contracting firm. You’re pretty much there on a day-to-day basis on financial terms. Depending on the type of contracting you’re doing, you may apply for unemployment compensation from the contracting firm depending on the terms you agreed upon. You can tell from your paycheck if you take out your own taxes, you’re on the harder type of contracting. If someone else takes them out, you can probably collect from them. If it’s the second case, don’t tell them something’s going wrong, even though they’ll tell you they’ll be willing to find you work. It’s a ploy so you won’t collect, but that’s another story.As for your work situation, be frank with your boss and ask about your options. With a merger, he’s looking after his behind, so he might be doing your job if push comes to shove. You also have to take his advice with a grain of salt. He doesn’t want to make his division look bad, and it sounds like things would be problematic for a while if you left suddenly. He may give intentions one way, but act on another when time comes.Look for possible work now, hopefully you’ll find something if things do not work out at the current place. If things look good in terms of possible employment, take the opportunity and look at all of your options.Finally, I know in your mind you probably don’t see the difference between contractor and employee, but in the grander sense of things, if you were an employee, the company would have to show your loss on their taxes. This is something investors are wary of and that event is something they will have to explain to them.

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