Are You an Employee or an Independent Contractor?

May 31, 2016 Posted By Patricia Kakalec

So what’s the harm to you?

Among other things, independent contractors do not have legal protections such as the right to be paid the minimum wage and the right to be paid overtime at time and a half of their regularly hourly rate. They may have to pay out-of-pocket for expenses that their employer should have covered. They may be denied leave under the Family and Medical Leave Act (“FMLA”), and be denied unemployment when their employment ends. They are not covered under the National Labor Relations Act, which provides protection for collective action. And they may be without redress for violations of the anti-discrimination laws and other worker-protection laws.

Wondering if you really are an independent contractor after all?

The first thing you should know: The issue of your employment status does not just depend on the agreement between you and your employer.

Even if you agreed that you are an independent contractor, that is not the end of the story. As the United States Department of Labor describes it, “[w]hether a worker is an employee under the Fair Labor Standards Act is a legal question determined by the economic realities of the working relationship between the employer and the worker, not by job title or any agreement that the parties may make.”

How can you tell if you are being misclassified as an independent contractor?

Under the federal Fair Labor Standards Act, an employee is a person that an employer “suffers and permits” to work. Courts and government authorities generally rely on what is called the “economic realities test” in deciding if a worker is an employee or an independent contractor. That is, courts look at the facts and circumstances of a worker’s particular situation to see what is really happening, who is really in control, and what the real economics of the workplace are.

An independent contractor will generally look like someone who is in business for herself.

That person might set her own hours, work for multiple companies, do work that requires special skills and has a fixed end date, provide her own equipment, and have the opportunity for profit or loss based on her work.

An employee, on the other hand, is economically dependent on the company that he works for.

He might work a schedule set by the company, wear a company uniform, use all of the company’s equipment, perform work that is the core function of the company, work at the company’s location, receive employee-type benefits, work for the company without a fixed end date, and not have invested any money into the venture. An independent contractor will generally control his own work, while an employee’s work will be subject to the company’s control.

There are many factors that are considered in evaluating whether an employee is an employee or an independent contractor.

Not sure if you are being misclassified as an independent contractor? At Kakalec & Schlanger we can help you analyze this issue.

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