There will always be overtime cases, Crone adds, because the law and regulations are complicated. “The law is in flux right now, particularly with the DOL [Department of Labor] and how it relates to overtime,” says Crone. “One main problem is that there are three or four tests, depending upon which statutory scheme you are looking at. The IRS has a different test than the FLSA regulations test and for most lay people, they really need to see a lawyer. Most will attorneys will consult with you at no charge for this kind of case, including me.”Crone will ask whether you are really independent or are you dependent on your employer and their working conditions. And even though lots of people are entitled to overtime, for one reason or another they are convinced that they are not entitled. It just takes some digging. If you are misclassified as exempt from overtime, your employer may try to deny you benefits and protections to which you are legally entitled.
Misclassified as Salaried Employee and Independent Contractor
Getting paid a salary doesn’t necessarily mean you are exempt. “The real test is what you do, not how you are paid,” says Crone. “Another way people are misled is their employer has hired them as independent contractors to avoid paying overtime, benefits and taxes.”
The Fair Labor Standards Act (FLSA) provides minimum wage and overtime pay protections to nearly all workers in the U.S. Some employers incorrectly treat workers who are employees under this federal law as independent contractors – in other words they have been misclassified.
Crone opines that 95 percent of independent contractors are misclassified. “For instance, an office worker is hired to perform certain services such as bookkeeping and copywriting and the boss requires them to work more than 40 hours per week,” says Crone, “or a retail manager is paid a salary but spends most of his time stocking shelves.”
Someone can call you a store manager but are you really in charge and can you really exercise your own independent judgment and discretion or do you have to look to someone higher up the chain for direction? A recent lawsuit was filed on behalf of Cash America Pawnshop managers who claim they are not performing managerial duties and therefore owed overtime. “We estimate that 1,000 store managers nationwide have been misclassified and eligible for overtime,” says Crone, “and upwards of 3,000 employees may have an overtime claim against Cash America Pawn for violating the FLSA.”
Crone says that each person’s duties have to be examined and determine whether the word “independent” has been used intentionally to avoid overtime compensation and more. “To be an independent contractor you must be in business for yourself and not working for someone else,” he explains. “If you cannot decide how and when you work, you cannot take other jobs, you must wear a uniform, chances are you have been misclassified.”
Here are a few facts from the Department of Labor. Under the FLSA,
• Even if you are an independent contractor under another law (for example, tax law or state law), you may still be an employee.
• Receiving a 1099 does not make you an independent contractor .
• Signing an independent contractor agreement does not make you an independent contractor.
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• Having an employee identification number (EIN) or paperwork stating that you are performing services as a Limited Liability Company (LLC) or other business entity does not make you an independent contractor.
• You are not an independent contractor merely because you work offsite or from home with some flexibility over work hours.
• Whether you are paid by cash or by check, on the books or off, you may still be an employee.
• “Common industry practice” is not an excuse to misclassify you.
Attorney Alan Crone and his firm recently filed a Tennessee overtime lawsuit. They also resolve workplace disputes nationwide.