Making Sure Independent Contractors Are Not Considered Employees

Signing an independent contractor agreement is not enough to make employees independent contractors. Under U.S. employment law, if workers are not properly classified, there can be unexpected liability for the employer. If workers are considered employees and they worked more than 40 hours, they are likely entitled to overtime pay under the Fair Labor Standards Act (FLSA). Merely having an independent contractor agreement is not enough to prevent the FLSA from applying.

Forbes has outlined the six factors a court considers when determining whether a worker is an employee or an independent contractor:

• Degree of the company’s control over how the work is performed
• Worker’s opportunity for profit or loss
• Amount of a worker’s investment in equipment or materials
• Whether the worker’s services require a special skill
• Degree of permanency of the working relationship
• Extent to which the service rendered was an integral part of the company’s business

The 11^th Circuit Court of Appeals applied these factors to a recent case involving technicians working for a cable provider and found that the technicians were indeed employees, despite having signed an independent contractor agreement. The Court looks to the economic reality of the situation, rather than whether the workers signed a contract. The Court found the following aspects of their working conditions to be outcome determinative:

• Technicians reported to the company facility for their assignments each day and did not have the authority to turn down assignments.
• Technicians did not work for anyone aside from the cable provider for an average of five years.
• They were supervised by the company and did not have discretion in how they performed their jobs.
• The technicians were trained by the company and provided services that were integral to the company’s business.

There are many elements to keep in mind when approaching an independent contractor agreement. If you are a business owner with questions about labor and employment law compliance, contact a Washington, D.C. attorney who is highly experienced in these legal matters.