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News | Jan 01, 2011

Workers Misclassified as “Independent Contractors” Continue to Reap Valuable FLSA Overtime Benefits

The overtime pay requirements of the Fair Labor Standards Act (“FLSA”) cover millions of American workers, including thousands of workers who have been misclassified as “independent contractors.”  If you represent workers who have been designated as independent contractors, you should be aware of the “striking breadth” of FLSA coverage.  As one appellate court has observed, the FLSA contains “the broadest definition [of employment] that has ever been included in any one act.”

Whether an employer truly is an independent contractor exempt from overtime coverage depends on the “economic realities” of her work experience, not the language of her employment contract.  The Third Circuit Court of Appeals has instructed Pennsylvania district courts to apply a six-factor test to determine whether a worker has been properly classified as an independent contractor.  The six factors include:

  1. the extent of the company’s control over performance of the work;
  2. the worker’s opportunity for profit or loss depending upon her managerial skill;
  3. the worker’s investment in equipment or materials required for her task and her employment of helpers;
  4. whether the service rendered requires a special skill;
  5. the permanence of the working relationship; and
  6. whether the service rendered is an integral part of the company’s business.

Recent court decisions demonstrate the continued viability of FLSA independent contractor cases.  For example, in April 2007, a Florida district court granted summary judgment in favor of a worker hired to provide maintenance services at trailer park facilities, reasoning that the defendant company exerted substantial control over the plaintiff’s work, which required no special skill.  Likewise, in March 2007, a Texas district court granted summary judgment in favor of a group of insurance agents who alleged that they were misclassified as independent contractors, reasoning that the agents “did not exercise any meaningful control over the insurance business they allegedly ran” and that the insurance company “retained control over major variables that determined [the agents’] ability to make profit, held them captive to the business, and made them dependent on [the company] for their success.”  Even more recently, a Nevada district court conditionally certified an FLSA collective action brought on behalf of a class of commercial painters, observing that “the labels parties use in contract documents do not control whether overtime pay is required by the FLSA.”

The Winebrake Law Firm has successfully fought for workers allegedly misclassified as independent contractors.  For example, in May 2007, a Pennsylvania district court approved an FLSA settlement on behalf of thirteen clients who sought overtime pay, alleging that they were misclassified as independent contractors.  Likewise, in In re. FedEx Ground Package System, Inc. Employment Parctices Litig., MDL 1700 (N.D. Ind.), The Winebrake Law Firm, working with co-counsel throughout the country, seeks to recover overtime benefits on behalf of FedEx delivery workers who allege they were misclassified as independent contractors.

If you represent workers who you believe may have been misclassified as independent contractors, you should contact a law firm with experience litigating wage and hour cases.

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