Traditional examples of independent contractors include a roofer or landscape company that you might hire to work on your house. In recent years, some employers have been hiring workers that they’ve classified as “independent contractors.” This means that the employer is not required to pay payroll taxes for the worker or comply with state or federal wage and hour laws.
In many cases, employers have misclassified their employees as independent contractors to be able to underpay them and avoid payroll tax liabilities.
If you believe that you’ve been misclassified as an independent contractor, you need to speak with a knowledgeable independent contractor attorney. The team at The Employment and Commerce Law Group can determine whether you may have been misclassified and can help you seek the pay and benefits that you are owed.
Differences Between Employees and Independent Contractors
Under the law, a worker is presumed to be an employee of the company that hires the worker. Various state and federal agencies have slightly different tests to determine whether a worker should be classified as an employee or as an independent contractor.
All the tests for classification tend to look at the same set of differences between employees and independent contractors, including:
- Employees
- Works on an indefinite basis for the employer
- Does not hold himself or herself out as being in the business of providing the same or similar services to others
- Is paid a wage or salary set by the employer and is mostly or entirely dependent on the employer for income
- Is directed on a daily or regular basis on what tasks to perform and how to perform them
- May have minor details of their performance controlled by the employer
- Independent contractor
- Works on a limited duration or contract basis for an employer
- Holds herself or himself out as being in the business of providing the same or similar services to others
- Is paid a contract-based project fee or hourly fee
- Obtains income from other clients and has an opportunity for profit and loss
- Can determine the manner and method to complete the end goal of the project
What the Department of Labor Takes into Consideration
Although various government agencies have specific independent contractor test with different sets of factors, the Department of Labor test incorporates many of the same factors as the various federal and state agencies’ tests.
The Department of Labor considers whether a worker qualifies as an employee or independent contractor under the Fair Labor Standards Act (FLSA), which the U.S. Supreme Court has ruled includes factors such as:
- The extent to which the worker’s services are an integral part of the employer’s business – the more integral, the more likely the worker is an employee.
- The permanency of the parties’ relationship – A permanent or indefinite relationship is indicative of an employer-employee relationship.
- The amount of the worker’s investment in facilities and equipment – If a worker has his or her own workplace or facilities and equipment, it is more likely he or she is an independent contractor.
- The nature and degree of control by the employer – If the employer can dictate minute details of the worker’s performance, it is more likely he or she is an employee.
- The worker’s opportunity for profit and loss – If the worker is able to make a profit or loss working for the employer, it is more likely he or she is an independent contractor, whereas an employee would always be “profitable” with a wage or salary.
- The amount of initiative, judgment, or foresight in open market competition with others required for the worker’s success – If the worker can offer the same or similar services to other individuals or entities, it is more likely that he or she is an independent contractor.
- The degree of independent business organization and operation – If a worker has organized their own business, whether it be a simple sole proprietorship or a more formal corporate entity, it is more likely that he or she is an independent contractor.
Other factors are immaterial to the employee versus independent contractor analysis, such as if the work is a performance, how the parties have titled their relationship, whether the worker is licensed, or the time and mode of payment. Finally, it should be noted that no one factor is necessarily decisive.
Wage and Hour Laws for Contractors
Wage and hour laws do not apply to properly classified independent contractors. That means that an employer is not required to pay an independent contractor a minimum wage or a minimum salary or pay overtime.
However, if a government agency or the courts determine that a worker was misclassified as an independent contractor, he or she will be entitled to any pay he or she would have been entitled to under the FLSA or applicable state wage and hour laws.
How an Independent Contractor Lawyer Can Help You
If you believe your employer has misclassified you as an independent contractor, a Nashville independent contractor lawyer can help you by reviewing the circumstances of your case to determine whether you may have been incorrectly classified.
The dedicated and experienced legal team of The Employment and Commerce Law Group can help you pursue relief and compensation from an improper classification, including filing a complaint with the appropriate state or federal agencies.
Our legal team will negotiate with your employer on your behalf to get you any additional pay you may be entitled to under wage and hour laws, in addition to compensation for payroll taxes that should have been paid by your employer had you been properly classified as an employee. If necessary, our legal team will help you pursue your claim in a lawsuit.
Don’t delay pursuing the compensation you are legally entitled to. Contact us today to schedule a consultation to discuss your case and your legal rights and options.
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