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My Boss Calls Me An Independent Contractor, Am I?

On Behalf of | Feb 27, 2019 | Wage: Minimum Wage, Wage: Overtime |

Best Ohio Overtime Pay Attorney Answer: How do I know if I am an employee or an independent contractor? What can I do if my manager says that I am not eligible for overtime pay because I’m an independent contractor but I’m working 60 hours per week? What kind of overtime compensation am I entitled to if my job broke the law by misclassifying me as an independent contractor? How do I find the top wage theft lawyer?

As experienced wage violation attorneys, we deal with a lot of employers, from mom and pop shops to multimillion-dollar corporations, who will do any to exploit their employees. Saving a couple bucks per employee for each pay period can add up to a lot of money for many employers. And, in the past, our wage and hour lawyers have written at length about employers’ unfair practice of misclassifying employees as exempt employees so that these employers can refuse to pay their workers overtime wages under the Fair Labor Standards Act (“FLSA”). (See, Are All Professionals Exempt From Overtime Pay? I Need A Lawyer!; Should I Be Paid Overtime Even If I Have The Title Manger? Top Ohio Wage and Hour Lawyer Reply; Top Wage and Hour Lawyer Reply: As A Salaried Employee, Am I Exempt From Overtime Pay?).

As our wage theft lawyers have explained, both federal and Ohio wage laws mandate that covered employers must pay their employees their usual hourly wage in addition to a fifty percent overtime premium for every hour worked over forty hours in a given week. Commonly, this is called paying time and a half for overtime hours. However, independent contractors are exempted from overtime compensation law. Employers will often try to exploit this loophole by labeling workers as independent contractors in an attempt to deny them the overtime compensation that they are rightfully entitled to. Yet, simply labeling a worker an independent contractor does not make it true. Whether or not an employee is an exempt independent contractor is a fact intensive exercise that receives a lot of scrutiny by courts. Recently the Sixth Circuit Court of Appeal, helped shed some light on this issue in the case Acosta v. Off Duty Police Servs.

Off Duty Police Services (“ODPS”), is a private security firm based in Louisville, Kentucky. ODPS provides private security officers to a variety of businesses. Almost all of ODPS’ workers are full time law enforcement officers, who work at ODPS as a way to make a few extra bucks. ODPS also has a few workers who are not off duty law enforcement officers. Both the off-duty law enforcement officers, and the non-law enforcement workers perform essentially the same job duties, however the off-duty law enforcement officers received a higher hourly wage. ODPS labeled both groups of workers as “independent contractors” as a way to avoid paying these workers their earned overtime wages (and probably to avoid payroll taxes). ODPS also failed to keep accurate pay and hour records, which are legally required under the FLSA. As out wage and hour lawyers have blogged about before, it is your employers’ obligation to keep track of time worked and you can still bring an overtime have claim if you, as the employee, did not track your time (See Who Is Responsible For Keeping Track Of My Hours Worked?; How Do I Prove How Much Time That I Worked? Best Ohio Wage Lawyer Reply?).

Both the off-duty law enforcement and non-law enforcement officers brought charges against ODPS under the FLSA. The officers claimed that all of the workers were entitled to overtime wages. The district court ruled that the non-law enforcement workers were considered employees under the FLSA, but the district court held that the off-duty law enforcement officers were independent contractors because they “simply were not economically dependent on ODPS and instead used ODPS to supplement their incomes.”

The off-duty law enforcement officers appealed the district court’s opinion to the Sixth Circuit. At the beginning of its opinion the Sixth Circuit held “the way we work in America is changing. The relationships between companies and their workers are more fluid and varied than in decades past. Our task in this appeal is to apply traditional legal protections to one such relationship.”

The “traditional legal protections” the court was referring to was what is called the “economic realities test” which is a six factor test that courts apply to an employer/worker relationship in order to determine if a worker is economically dependent upon an employer and therefore is an employee, or an independent contractor. The six factors the court looks to are: (1) whether the service performed by the worker is an integral part of the employer’s business, (2) the degree of skill required for the worker to perform the services, (3) the worker’s investment in equipment or materials necessary for the job, (4) the permanency of the relationship between the parties, (5) the worker’s opportunity for profit or loss, depending upon his or her skill, and (6) the degree of the alleged employer’s right to control the manner in which the work is performed. Let’s walk through how the Sixth Circuit applied this six-factor test to the facts in Acosta.

Beginning with factor (1), the court held that the off-duty law enforcement officers services were indeed integral to ODPS’s business. The court specifically held that “the more integral the worker’s services are to the business, then the more likely it is that the parties have an employer-employee relationship.” In the case of Acosta, there was no doubt that the duties performed by the off-duty law enforcement officers was clearly integral to the company. The court found that, ODPS’s entire business was built around the security services provided by its workers. One only has to look to the Off-Duty Police Services name to recognize how intertwined ODPS’s business was with the off-duty officers. ODPS attempted to claim that the services provided by the off-duty officers was not integral to its business because ODPS was only “an agent between its customers and independent sworn and nonsworn officers.” The court found that even if this was true ODPS could not operate without the services the officers provide. The court weighed this factor heavily in favor of the off-duty officers.

The second factor considers the worker’s skillset, which is examined in reference to the job duties. The court held that the skills required to work for ODPS were not “specialized” and were far more limited than the skills of a typical independent contractor. The United States Court of Appeals based this opinion on the workers’ testimony at trial, that their job duties required little skill, initiative, or training. One worker described the simplicity of his job saying “Well, sometimes we just had to sit in our cars with the lights flashing. Sometimes I would have to actually get out and stand and be seen, and other times I would have to flag traffic.” Another worker said that he “would show up at a site and just make sure that everything was safe, locked up, or patrol the lots

ODPS attempted to say that the off-duty officers had the “high degree of skill and training required to become a licensed police officer.” But, the court reasoned that the second factor does not concern the skills possessed the workers instead it considers “the degree of skill required for the rendering of the services.” Because the services ODPS workers provided did not require the full skill or training of a licensed police officer the court reasoned that the workers at ODPS did not need a high degree of skill to perform their job duties. Therefore, this factor also weighed in favor of the employee status of ODPS’s workers.

Factor (3) also weighed in favor of classifying ODPS’s workers as employees. ODPS workers had to invest little of their own money in specialized equipment in order to perform their job duties. This factor compares the worker’s monetary investment to “the company’s total investment, including office rental space, advertising, software, phone systems, or insurance.” If a worker must invest a lot of their own money in specialized equipment and tools than it is likely a court will classify the worker as an independent contractor. In this case, ODPS supplied workers with the basic equipment necessary for the job, including stop-and-go signs, reflective jackets, and badge-shaped patches with the ODPS logo. For the off-duty officers, additional items including a police uniform and car required almost no capital investment because they already had those items through their police work. The non-law enforcement officers usually spent between $3,000 to $5,000 on equipment, most of that cost was from getting a police style vehicle. The court found that because the vehicle could be used by the workers for personal purposes it was not “specialized” equipment. The court weighed the workers minimal investment in equipment against ODPS’s annual operating costs and found that this factor also weighed in favor of classifying ODPS’s workers as employees.

Factor (4) was slightly more challenging for the court to parse out. The court found that many of ODPS’s workers accepted jobs intermittently and the off-duty officers maintained their full-time employment as police officers. ODPS attempted to argue that because these officers had another source of income and did not work solely for ODPS they could not be considered permanent employees. The court disagreed, finding that it is irrelevant if an employee has another source of income. What mattered to the court was the length and consistency of the workers relationship with ODPS. Many of the officers had consistently worked for ODPS for years, and in some cases decades, and for example, one officer testified, that he had routinely worked at least 20 to 25 hours per week for ODPS for “five or six years.” Because of the consistency of the relationship the court found that this factor also weighed in favor of classifying ODPS’s workers as employees.

Factor (5) asks whether the workers had “opportunities for profit or loss dependent on [their] managerial skill.” this factor examines if workers “could exercise or hone their managerial skill to increase their pay.” This factor favors independent contractor status if, for example, a worker uses his managerial skill to “improve his efficiency such that he can complete more” jobs per day. The court found that the workers in this case were not in a position to apply their “managerial skill” to increase their pay. As discussed above, the ODPS’s jobs required limited skill, experience, or initiative. Further, no matter how well a worker performed their job they were payed a set hourly wage. ODPS claimed that because workers could accept or reject jobs, they controlled their opportunities for profit. Once again, the United States Court of Appeals for the Sixth Circuit disagreed. Because ODPS’s workers earned set wages to perform low-skilled jobs for fixed periods of time, this factor also supported employee status.

The last factor looks to the control exercised by the company over workers. The court asks whether the company “retains the right to dictate the manner” of the worker’s performance. ODPS claimed that they did not closely supervise its workers, and that while they had employment policies in place, they rarely enforced them. For example, workers had the option to accept or reject assignments. Further in addition to ODPS’s policies, the workers’ performance depended on on-site instructions they received customers, not just directions from ODPS. However, the court found that the work performed by ODPS workers was not complex enough to require constant supervision, and that ODPS did have the power to discipline its workers. The court was unable to determine which side this factor favored and wrote it off as a wash.

Because five of the six economic-reality factors supported an employment relationship between ODPS and its workers the court found that ODPS’s workers were employees entitled to overtime wages under the FLSA.

If you believe that your employer has misclassified you as an independent contractor and is not paying your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at Spitz, The Employee’s Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, Call our office at 866-797-6040.


The materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Am I entitled to overtime?”, “Does my job have to pay me extra for working on weekends?”, “Can I sue if my paycheck is not right?”, or “What do I do if my boss makes me punch out an keep working?”, the your best option is to contact an Ohio overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of Spitz, The Employee’s Law Firm, Brian Spitz, or any individual attorney.

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