Misclassification: Salaried Employees and Independent Contractors
Generally, employers are required to pay employees overtime (time and a half) for working more than 40 hours per week. But, as with all rules, there are exceptions. Under the Fair Labor Standards Act (FLSA), an “exempt” employee need not be paid overtime. The FLSA includes a fairly long list of jobs that are “exempt.” Common examples include:
- To be exempt, the employee must actually manage subordinates.
- “White collar” administrative or executive jobs. This means high-level business administration, not administrative desk duties. For example, a Chief Accounting Officer would fit under the “administrative” exemption, but an administrative assistant or secretary would not.
- Highly compensated employees who do office or “white collar” jobs. Employees must be paid a salary of $100,000 or more each year to be exempt.
- Auto, truck, or farm salespersons and mechanics.
- Over-the-road tractor drivers, or other motor carrier employees.
- Railroad and airline employees.
- Taxi drivers.
- Seasonal farm laborers.
Misclassification claims are common. Employers often misclassify employees as salaried or exempt when they should not. Whether an employee’s job is “exempt” can be a complicated question. The Department of Labor has regulations that specify how to decide, but these regulations are frequently the subject of lawsuits. If you are not sure whether you have been misclassified, you should contact an attorney to find out.
If you have been misclassified, then you may be able to recover time and a half for all of the unpaid overtime hours that you worked. Contact Teske, Katz, Kitzer & Rochel to learn more.
Improperly Classifying Employees as Independent Contractors
A similar issue to employee misclassification arises when an employer improperly classifies an employee as an independent contractor. The law prevents employers from treating employees as independent contractors. Still, employers frequently do misclassify employees as independent contractors. This deprives employees of many benefits, and saves employers significant money and resources.
Employees misclassified as independent contractors may lose out on employment benefits, healthcare coverage, family and medical leave, overtime, minimum wage, or unemployment insurance, to name a few. Employees are also entitled to legal protections, like anti-discrimination or retaliation laws, that may not apply to independent contractors. In short, being misclassified as an independent contractor can seriously harm an employee.
Federal and state law both establish tests that set out the proper status of a worker as an employee or an independent contractor.
Here is one simple way to think about the difference: If a company provides a lot of direction or control over how you do your job, or provides all of the resources to do your job, then you are likely an employee. If you are called an independent contractor, then you may be misclassified.
If you or anyone you know has been subjected to significant direction and control by any employer, even though classified as an independent contractor, consultant, or vendor, you may be entitled to the payment of benefits that are provided to regular employees.
These tests are complicated and lawyers argue about how to apply them. If you are not sure whether you are misclassified as an independent contractor, talk to an employment lawyer at Teske, Katz, Kitzer & Rochel to find out.
If you have been misclassified, you may be able to recover unpaid wages or salary, retirement benefits, medical benefits, vacation, profit sharing benefits, attorneys’ fees, interest, and other benefits.