One of the most abused areas we have seen is the misclassification of employees as independent contractors
The FLSA only applies to “employees.” As such, companies have tried to completely avoid their FLSA responsibilities by claiming that their workers are not employees at all, but instead, are independent contractors. Another reason companies attempt to misclassify employees as independent contractors is because of the enormous benefits savings. When classified as an independent contractor, these companies are relieved of their legal duty to pay payroll taxes, workers compensation premiums, administer workers compensation claims, pay unemployment insurance, etc. Similarly, since the individuals are not employees, these companies do not have to provide benefits under the Family Medical Leave Act or protections under a host of other federal discriminatory laws. The problem that many of these companies face is that although they claim an individual is an independent contractor, they attempt to control all the major aspects of the person’s job.
Presently, we have seen the misclassification of employees as independent contractors in many service related industries. For example, a large number of companies are outsourcing their customer service functions to individuals working from their home or at a remote location. These individuals typically get paid a per minute rate that often results in them making less than the minimum wage. Additionally, many of these individuals are required to spend hours training on certain products and services, yet they do not get paid for any of this time.
Other service industry jobs where we have identified independent contractor misclassifications include:
- the construction industry;
- delivery/courier services;
- stocking vendors;
- maintenance crews;
- food processing plants;
- dental assistants;
- nail salons;
- landscaping crews.