Federal and state laws provide powerful protections for employees. These include requirements for paying minimum wage, overtime, and other benefits. However, independent contractors and some salaried employees are not covered by minimum wage and overtime laws. Accordingly, companies may try to misclassify workers as independent contractors or exempt salaried employees in order to cut costs and skirt the law.
Independent contractors do not have the benefit of numerous state and federal laws that protect their labor rights. However, that does not give companies the green light to take advantage of them. A competent independent contractor lawyer could make the case for your recovering damages because of this mistreatment. Call Tittle & Perlmuter today for a free consultation on your case.
What is an Independent Contractor?
An independent contractor is a worker who, in contrast to an employee of a company, is considered self-employed in that they do not actually work for the company. They have a contract to either perform a specific isolated task for the company or they conduct their functions at the facility of the employer.
For instance, a truck driver could be an independent contractor for a company if they have their own truck, or they can take jobs from a variety of companies that need deliveries. Being independent also means they can reject jobs if they choose to.
Independent contractors can go from company to company and take various jobs. Alternatively, someone like a mental health provider might have their own set of clients and set their schedule, perhaps at a certain facility. The facility might do the billing for them but it does not have control over how the job is done. In these situations, the contract might call for the facility to receive a certain percentage of the client’s fee.
Independent Contractors Vs. Employees
Most people who work for a company are “employees” as defined by the FLSA and state laws. “Employees” work under the employer’s direct supervision and control at designated places and times.
By contrast, independent contracts have more freedom to perform their jobs on their own terms. They may work from home or off-site and can keep irregular hours, following deadlines instead of workdays.
What Does a Worker’s Status Determine?
A worker’s status as an employee or independent contractor has consequences for both workers and employers. An employer does not need to withhold taxes from an independent contractor’s paycheck and does not need to report earnings to the IRS. More importantly, independent contractors do not enjoy many protections under state or federal laws. This may include:
- Workers’ Compensation Benefits
- Minimum Wages
- Overtime Pay
- Social Security Contributions
It is easy to see why misclassifying an employee as an independent contractor can have a significant impact.
Work that is Essential to an Employer’s Business
If a person performs a job integral to the company’s business, there is a better chance the worker is an employee rather than an independent contractor.
Profit and Loss Opportunities
Employees will recover their salary or hourly rate regardless of whether their workplace endeavor succeeds. Independent contractors will assume financial risks when they engage in agreements with businesses.
Pay for Equipment and Facilities
If the company provides workplace facilities and equipment, this may indicate the person is an employee instead of an independent contractor. Workers who are independent contractors should be providing their own facilities because they are their own businesses.
The Skill and Initiative of the Worker
An independent contractor should have independent business judgment. While employees and independent contractors are both likely skilled in their fields, if the company has significant control over how the worker carries out his or her tasks, the person is less likely to be an independent contractor for the purposes of employment law.
The Permanence of the Worker’s Relationship to the Employer
If the relationship is permanent and there’s no definite point when the relationship will likely terminate, the individual may be an employee. If an employer hires a worker for a specific project, the individual is more likely an independent contractor.
Employer Control
If the employer sets work hours, details how the worker must perform his or her job, states whether the worker can hire others to help with the project, and otherwise exerts significant control, the person might be an employee, not an independent contractor.
Training
Companies hire independent contractors for skills they already have and do not typically train these individuals for their positions.
Working for Multiple Companies
Independent contractors will often work for multiple companies. If an employer expects an individual to work just for them, that person is more likely to be considered an employee.
Ability to Terminate the Relationship
Employers can fire employees, and employees can quit. Independent contractors will have a contract to complete a job for a company. As such, terminating the relationship can be considered a breach of contract.
Labor Laws for Salaried Employees in Ohio
Like the classifications for independent contractors vs. employees, the distinction between exempt and non-exempt salaried employees is also important to understand. To qualify as exempt, the employee must earn a minimum salary of $36,568 annually and must be primarily engaged in job duties that meet statutory exemptions. While exempt employees still receive unemployment and workers’ compensation protection, many other labor laws, including minimum wage and overtime requirements, do not apply.
However, a workplace that misclassifies workers as exempt may be liable for nonpayment of wages. In these cases, affected workers should speak with a local salary misclassification attorney.
Misclassification in Independent Contractor Cases
Contractors in Ohio are not subject to the laws governing wages, hours, benefits, or the timing of payments as most employees are. As a result, companies will sometimes misclassify employees as contractors to avoid these labor obligations.
Attorneys sometimes do not take employment discrimination cases from contractors because these individuals do not always know that they have labor protections. In some rare cases, the employer and worker might misclassify the employee as an independent contractor even though the parameters of their employment might make them a full employee under the law.
Furthermore, employers are prohibited from trying to discriminate on the basis of race, gender, and other characteristics by misclassifying someone as an independent contractor. A local attorney could determine if an employee has been misclassified as an independent contractor, and therefore did not provide the full wages or benefits they should have. A lawyer could also help by filing lawsuits that would aim to rectify the violations. In many instances, this is typically a failure to pay minimum wages, failure to pay overtime, or failure to include the employee in the company’s benefits plan.
