Legare, Attwood, & Wolfe’s Steven Wolfe, along with co-counsel Justin Scott of Scott Employment Law, P.C., settled overtime wage claims against a Fortune 500 Company located in Atlanta. They filed suit in federal court under the Fair Labor Standards Act on behalf of two of the company’s former recruiters. The lawsuit accused the company of mischaracterizing these recruiters as “non-employee workers” and “contractors” to avoid paying them overtime wages.
The Fair Labor Standards Act (FLSA) is the federal law that provides certain employees the legal right to overtime pay when they work more than 40 hours per week. To be covered by the FLSA, you must be an employee of your company. More and more, employers label their workers “independent contractors” or “non-employees” to avoid paying them overtime, even though these workers do the jobs of regular employees and work long hours.
But, whether you are an employee under the law is a question of your actual working relationship with the company, not the label the company places on you or even the contracts the company has you sign.
Am I covered by the FLSA?
Nearly every employer is covered by the broad provisions of the FLSA, and the FLSA begins with an equally expansive definition of employee: any individual employed by an employer. However, this definition excludes independent contractors, or “non-employees.”
Am I an employee or an independent contractor?
Independent contractor status depends on the “economic reality” of the situation. Simply labeling an employee an independent contractor does not make it so under the law. If you depend on the company for your economic livelihood, you are likely an employee under the law. On the other hand, if you are economically independent from the company – if you have a business of your own – then you are likely an independent contractor.
To gauge the economic reality of a worker’s relationship with a company, courts assess six factors:
- The extent of the employer’s control over the individual
- The individual’s opportunity for profit and loss with the employer based on his or her managerial skill
- The individual’s Investments in the materials and equipment he or she needs for the job
- How much Special skill is required for the job
- The Permanency of the relationship between the employer and employee
- How important the individual’s work is to the company
These factors are weighed against each other and will vary on a case by case basis. As a general rule, the more involvement the employer has with the individual, the more likely it is that the individual is an employee and NOT an independent contractor. For example, satellite technicians in Amponsah v. DirecTV, LLC in the Northern District of Georgia were not necessarily independent contractors even though the technicians drove their own cars, provided their own tools, and brought significant experience from their prior jobs and trainings. This decision echoed the 11th Circuit’s leading decision on the matter in Scantland v. Jeffry Knight, Inc. in 2013.