It’s important that workers are classified correctly to ensure they receive benefits like minimum wage, overtime, family medical leave and other protections. There is information available to help workers understand whether they are considered employees or independent contractors under the Fair Labor Standards Act (FLSA).
While there is no single rule or test to classify workers under the FLSA, there are factors that a court may view as significant in making a determination. These include the extent to which the services provided are an integral part of the business and the permanency of the relationship between the worker and employer.
It may also look at the degree of independent business organization and operation, the control over the work and the opportunities for profit and loss, among other factors.
Generally, the lack of a formal employment agreement, limited information about where the work is performed or the timing of pay generally do not have a bearing on whether there is an employment relationship.
If a worker is determined to be an employee, his or her employer has an obligation to pay minimum wage and, in most cases, also overtime for hours worked over 40 each week.
Misclassification of employees can occur in any industry, but there are some examples of when it may occur more frequently.
In the construction industry workers may be hired as contractors when they should be classified as employees because they do not meet the independence guidelines in the FLSA.
Also, if a franchisor has control over a franchisee, the franchisee may need to be classified as an employee. There can also be employment classification issues for students and trainees.
If a worker believes he or she has been misclassified, an experienced attorney can help.