FLSA AND MISCHARACTERIZATION OF EMPLOYEES INDEPENDENT CONTRACTORS
Independent contractors are exempt from the requirement that employees must be paid the minimum wage and time and half for overtime hours. However, an employer cannot avoid the responsibility to pay both minimum wage and time and a half for overtime hours simply by labeling a worker to be an “independent contractor” if the worker is actually an employee. Similarly, the employer and the employee cannot privately agree or contract to avoid the requirements imposed by the Federal Fair Labor Standards Act (FLSA) and the Kentucky Wage and Hour Act (KWHA).
Courts use the “economic-reality” test to determine whether an independent contractor is actually an employee who is entitled to the protections of the FLSA. There are six factors to indicate whether an employer-employee relationship exists:
1. the permanency and exclusivity of the relationship between the employer and the worker;
2. the degree of skill required for the work to be performed;
3. the worker’s own investment in equipment or materials;
4. the worker’s opportunity for profit or loss, depending upon his skill;
5. the degree of the employer’s right to control the manner in which the work is performed; and
6. whether the work performed is an integral part of the employer’s business.
No single factor is determinative. The ultimate question is whether the worker is economically dependent or independent from the employer. If the worker is economically dependent, then the worker is most likely an employee who is entitled to minimum wage and overtime pay.
The FLSA and KWHA exist to protect your rights to fair compensation. Your rights are determined by the actual circumstances and not by mere descriptions or labels. If you think you are entitled to backpay and overtime, contact the Ron Aslam Law Office for a consultation to ensure that your rights are protected and that you receive the compensation you deserve.