Labor – Overtime and Independent Contractors

Employers often hire workers and categorize them as independent contractors to avoid paying overtime, taxes, and complying with other federal and state labor and employment related laws. In overtime cases the courts and the administrative agencies do not automatically accept the idea that a worker is not entitled to overtime rights by simply categorizing the worker as an independent contractor. The workers are more often than not still employees and can file overtime claims.

The test to determine if a worker is an independent contractor is based primarily on the principal’s right to direct and control the manner and means by which the work is performed. It does not mean the employer has to exercise these rights. If the principal has the right to control then the worker will be an employee, even if the employer never actually exercises the control. When the principal does not have the right of direction and control over the worker, then the worker is independent contractor. The question in most cases is what does the right to control mean.

1. Do you instruct or supervise the worker while the worker is working ?

Independent contractors are free to jobs in any way they see fit. It is the end result that matters for independent contractors. If there are company procedures or if the worker is given specific instructions on how to do the work, then chances are that the worker is an employee.

2. Can you fire the worker at any time or can the worker quit at any time without notice ?

If you have the right to fire the worker without notice, it strongly shows that you have the right to control the worker. Independent contractors are hired for specific jobs and cannot be fired until the job is complete. Independent contractors …

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