Misclassifying an Employee as an Independent Contractor or Volunteer

 

Characteristics

An employment relationship under the FLSA must be distinguished from “Independent Contractor,” “volunteer” or other relationships.  An employer may call someone an “independent contractor” or a “volunteer” even though the FLSA would recognize an employment relationship.  The employer-employee relationship under the FLSA is tested by “economic reality” rather than “technical concepts” or labels used to describe the relationship. 

Typical Problems

(1) One of the most common problems is in the construction industry where contractors hire so-called independent contractors, who in reality should be considered employees because they do not meet the tests for independence, as stated above.

(2) Franchise arrangements can pose problems in this area as well. Depending on the level of control the franchisor has over the franchisee, employees of the latter may be considered to be employed by the franchisor.

(3) A situation involving a person volunteering his or her services for another may also result in an employment relationship. For example, a person who is an employee cannot “volunteer” his/her services to the employer to perform the same type service performed as an employee. Of course, individuals may volunteer or donate their services to religious, public service, and non-profit organizations, without contemplation of pay, and not be considered employees of such organization.

(4) Trainees or students may also be employees, depending on the circumstances of their activities for the employer.

(5) People who perform work at their own home are often improperly considered as independent contractors. The Act covers such homeworkers as employees and they are entitled to all benefits of the law.

Requirements

When it has been determined that an employer-employee relationship does exist, and the employee is engaged in work that is subject to the Act, it is required that the employee be paid at least the Federal minimum wage, ($5.15 an hour) and in most cases time and one-half his/her regular rate of pay for all hours worked in excess of 40 per week. The Act also has child labor provisions which regulate the employment of minors under the age of eighteen, as well as record keeping requirements.

 

 


Yezbak Law Offices • Nashville, Tennessee 37215 • 615-250-2000 • 866-255-3866