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You May Not Be an Independent Contractor – and May By Eligible for Overtime

You May Not Be an Independent Contractor – and May By Eligible for Overtime

An independent contractor is generally thought of as someone who is compensated by another party without withholdings and taxes and who also is paid a fixed amount for a specific job or task. Cable TV installers, painters and manual laborers often are paid as independent contractors.

Companies often want to treat laborers as independent contractors so that they do not have to pay overtime compensation to the laborers. Independent contractors who truly are independent and not subject to excessive terms and conditions by the party for which they are performing services are not eligible for overtime pay, under the Fair Labor Standards Act (“FLSA”), which is the overtime law.

Some workers often think that they are not entitled to overtime pay if they consider themselves independent contractors. However, if a worker is not truly an independent contractor, he or she can be eligible for overtime pay – even from a company that is not his or her direct employer. Recently, the Fourth Circuit Court of Appeals, which includes Maryland, said as much in two cases,  Hall v. Albrecht, No. 15-1857 (4th Cir. Jan. 25, 2017) and Salinas v. Commercial Interiors, Inc., No. 15-1915 (4th Cir. Jan. 25, 2017).

These cases are extremely important because they show that, under certain circumstances, workers labelled as independent contractors can still get overtime pay – even from a company that is not the direct employer.

In these two cases, the laborers worked as independent contractors for subcontractors that provided services for larger companies, who, together, controlled the terms of their employment. The workers sued the subcontractors and the larger companies as “joint employers,” seeking overtime pay and the Court ruled in favor of the workers.

First, the Court determined that that the companies were the workers’ joint employers because, together, the companies codetermined the essential terms of the worker’s employment. Those “essential terms” included setting the worker’s pay, daily supervision of their work, and providing the workers with the tools and equipment necessary to do their jobs.

Second, the Court found that the workers were employees and not independent contractors. The Court reasoned that, because the companies’ combined influence over the essential terms of the workers’ employment qualified them as the workers’ joint employers, the workers were the employees of the companies. This was true even though the workers were not the employees of either individual company.

Finally, the Court found that the larger companies and the subcontractors were responsible, individually and jointly, for compliance with the FLSA and analogous Maryland state wage laws. Accordingly, the workers were entitled to overtime wages.

If you are an independent contractor or think you are being wrongly denied overtime pay, contact the attorneys at Lebau & Neuworth; we may be able to help, as we are experienced in dealing with joint employment and overtime issues. For more information, contact us at 888-456-2529 or lebauneuworth.com/contact-us.

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