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Employers and Independent Contractors and the Fair Labor Standards Act


The Fair Labor Standards Act (FLSA) comprises four major requirements: a minimum wage, an overtime standard, restrictions on child labor, and equal pay. These requirements apply to all “covered employees” under the Act. Many employers attempt to get around the strict requirements of the FLSA by labeling employees as independent contractors.  If you are an independent contractor who is doing the work of an employee, and therefore eligible for employee benefits like overtime and minimum wage, contact the wage and hour lawyers at Maginnis Howard at (919) 526-0450 or submit a new case inquiry here.

If an individual hired to perform work for a company is a true independent contractor, no employment relationship exists and there is no FLSA coverage. This means that person is not entitled to overtime or minimum wage payments. If the person is an employee, they must be paid both the minimum wage and overtime at a rate of one and one-half of their regular pay. An “employer” includes “any person acting directly or indirectly in the interest of an employer in relation to an employee.” An “employee” is “any individual employed by an employer,” and “employ” means “to suffer or permit to work.”

The primary consideration is “economic realty,” meaning the economically dependence on the relationship for which a person works. The economic realities test does not require employees to be completely dependent on a business for their basic source of income. The issue is whether a worker depends on the business for their continued employment during the period the business operates. This is a highly specific test that requires an analysis of multiple factors.

Another employment status issue relates to students and trainees. Generally, on-the-job training is a compensable activity. Oftentimes though, employers attempt to unlawfully avoid paying employees for the time spent training. There are situations when individuals are not employees when being trained without having formal job with the company. The Department of labor has developed several criteria indicating training, not an employment relationship. The factors include whether the training is similar to that provided by a vocational school, training is for the benefit of the trainees, trainees do not displace regular employees, trainees work under close supervision, employer gets no immediate advantage from the trainees, trainees are not entitled to a job at the end of the training period, and employer and trainee understand wages are not going to be paid for the training time.

If your employer is claiming you are an independent contractor and denying you minimum wage or overtime, contact the Raleigh unpaid wage and overtime lawyers at Maginnis Howard at (919) 526-0450 for a free consultation regarding your rights. Maginnis Howard is a Raleigh firm handling employment cases dealing with unpaid wages and overtime throughout North Carolina. The firm takes certain wage and hour/overtime cases throughout North Carolina, particularly when groups of workers are involved. Contact the firm to discuss your overtime claim today or submit a confidential new case inquiry here.