Category Archives: FLSA

04.13.17
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Are Independent Contractors Exempt from the FLSA?

hurry-FLSA-independent contractor -2119711_1920Sort of. The Fair Labor Standards Act (FLSA) covers only employees, not independent contractors. The FLSA’s requirements on minimum wage and overtime, therefore, do not apply to independent contractors.

But wait, dear reader, don’t click away quite yet! There’s more! The real question is whether your independent contractor is really an independent contractor.

The question of Independent Contractor vs. Employee is determined under the FLSA by applying an Economic Realities Test to the facts of the relationship, not by deferring to how the parties have characterized they relationship.

The Economic Realities Test evaluates whether the worker is economically reliant on the company for which services are being provided, as opposed to in business for himself/herself.

I have written about the Economic Realities Test here, walking the reader through the various factors that courts and the DOL use to determine Who Is My Employee? under the FLSA.

The bottom line: A true independent contractor is not covered by the FLSA, but an Economic Realities analysis must be applied to determine whether a worker is truly an independent contractor.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

04.10.17
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How Can There Be Misclassification When The Worker Prefers to Be an Independent Contractor?

Alan Hudock

Photo of Singer Dave Mason (We Just Disagree), by Alan Hurtock

Let’s start with this: Everyone is happy being an independent contractor until they’re not.

What do I mean by that? Right now, the relationship works. The contractor performs, and you pay for the work.

But what happens when things go south? As soon as you decide you no longer need those services, the contractor might stop being your BFF.

A disgruntled former contractor has some options, all of which involve some variation of this story: “Once upon a time, I was misclassified and should have been an employee.” None of the former contractor’s possible next steps are good for you: Continue reading →

03.09.17
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Joint Employment Tests Are All Wrong, Says Federal Appeals Court

Fourth Circuit Adopts More Liberal Joint Employment Test Than NLRB’s Browning-Ferris Decision

IMG_1045(This article originally appeared in Corporate Counsel on March 1, 2017. Click here to view the original.)

Are 59 years of joint employment rulings all wrong? Yes, says a federal appeals court in a landmark Fair Labor Standards Act (FLSA) decision issued in late January.

Relying on a 1958 Department of Labor (DOL) regulation, the Fourth Circuit Court of Appeals has rewritten the test for joint employment, defining the concept so expansively that every outsourced and staffing agency relationship might be deemed joint employment under the FLSA. The decision in Salinas v. Commercial Interiors, issued unanimously by a three-judge panel (all Obama appointees), takes a more radical position on joint employment than even the NLRB took in its controversial 2015 Browning-Ferris decision.

The Court of Appeals concludes that everybody – including the DOL itself – has been misinterpreting the DOL’s joint employment regulation for 59 years.

Is that possible? Can the Court literally mean that? Or is this an example of the adage, “bad facts make bad law”? The facts in Salinas suggest there was probably a joint employment relationship under any test. It remains to be seen how this test will be applied and whether decades of court decisions and DOL guidance will truly be disregarded.

Meanwhile, employers in North Carolina, South Carolina, Maryland, Virginia, and West Virginia are immediately and directly impacted, since these are the states that the Fourth Circuit covers.

What Happened?

Continue reading →

02.13.17
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Why Your Standard Agreements with Staffing Agencies Are Risky Business (Starring Tom Cruise)

broken-glass-joint-employment-agreementIt’s Valentine’s Day. You and your sweetie want to get away for the weekend. Your high school offspring will stay home. They seem responsible, promise not to break the law, and promise if they break anything they will pay for it. So you’re good, right?

Come on, wake up. Have you seen Risky Business? American Pie? House Party (very underrated movie, by the way)? Continue reading →

01.23.17
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Can You Pay a Contractor Overtime? Should You?

independent-contractor-questionsLet’s talk about good old-fashioned 1099 Independent Contractors — you know, those individuals who are happy to be called contractors until they’re released and then decide they should have been treated as employees.

When retaining a contractor, one of the goals, of course, is to ensure that the contractor is properly classified and is not really (factually) an employee. A secondary goal, however, is to limit liability if the contractor is misclassified.

Today’s question sits at the intersection of these two goals. Continue reading →

01.12.17
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You Knew College Athletes Weren’t Employees, But Did You Know Why?

college-athletesYou knew that college athletes were not employees of their schools, but did you know the legal reason why?

Let’s look at a recent case that arose under the Fair Labor Standards Act (FLSA).

In early 2015, a group of student-athletes sued several schools and the NCAA, alleging that they had put in thousands of hours of work for the benefit of their school, without compensation. The student-athletes alleged that they should have been paid at least a minimum wage, as required under the FLSA.

Continue reading →

01.10.17
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What is the Economic Realities Test?

OLYMPUS DIGITAL CAMERA

The Economic Realities Test seeks to determine whether, as a matter of economic reality, the worker is reliant on the hiring party, or is in business for him/herself.

[UPDATED 10/9/2021, 3/15/22:  See Notes in red, below.]

The Fair Labor Standards Act (FLSA) uses an Economic Realities Test to determine whether a worker is a contractor or an employee.  If the worker is an employee under this test, then the federal minimum wage and overtime rules apply, subject to any exemptions.  This test is also used to determine who is an employee under the Family and Medical Leave Act (FMLA). Continue reading →

12.26.16
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Why Misclassification Matters

Uh Oh!

hamster-uh-oh

With a finding of worker misclassification, the workers you thought were not your employees are suddenly deemed your employees.  What does that mean practically?  It means that you have not been complying with all of the laws that apply to employees.

Continue reading →