Independent Contractors Owed Overtime Pay?

Recently, there have been an increasing number of cases where courts have determined that independent contractors are owed overtime pay by their employer. Now at first, this seems like a contradictory statement. How can you be an independent contractor and have an employer?

In fact, true independent contractors are exactly what their name implies: independent. They are self-employed workers who often have specialized skills and are hired for specific jobs lasting for a determined amount of time. As a matter of course, independent contracts have customers, not employers. It is very uncommon for an independent contractor to have only one customer that he/she works for year round, the biggest exceptions occurring when (1) a job requires an extensive length of time to be completed, or (2) there is a contract for several consecutive jobs in place.

The problem arises, however, when an employer mistakenly or intentionally misclassifies an employee as an independent contractor. The distinction between what constitutes an employee versus an independent contractor can be somewhat ambiguous, so it is possible, though unlikely, that some employers don’t recognize or understand the importance of the classification. More often, an employer desires to avoid payroll tax, insurance, salary and overtime headaches, having to comply with other requirements such as providing meal periods and rest breaks, and reimbursing their workers for business expenses incurred in performing their jobs. The “independent contractor” designation seemingly allows employers to avoid such inconvenience. In order to solidify the designations, employers are even having their employee sign contracts stating that they are “independent contractors” and giving them IRS form 1099 instead of W-2’s at the end of the year. However, courts have found that that the nature of the service itself and not the ways that it is defined determines whether a person is an employee or an independent contractor.

For instance, courts have found that an accurate classification can be found by examining such considerations as the following:

(1) The degree of control exercised by the employer over the worker, especially in regards to work schedule, uniform, etc.;
(2) The worker’s opportunity for profit or loss depending upon managerial skills;
(3) The alleged worker’s investment in equipment or material required for the tasks or the employment of helpers;
(4) Whether the service rendered requires special skills;
(5) The degree of permanence of the working relationship;
(6) The extent to which the work is an integral part of the employer’s business,
(7) The length of time for which the services are to be performed; and (8) The method of payment, whether by time or by the job.

If you are uncertain as to whether you have been correctly classified as an independent contractor, then you should contact a lawyer immediately. If, in fact, you should be considered an “employee” then you may entitled to several years of overtime pay that was withheld from you. Feel free to contact us at to make sure that your rights are protected and that you get all of the money that you rightfully earned.

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