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Can “Independent Contractors” Actually Be Employees Under The FLSA?

by | Aug 4, 2022 | Federal Law Update, Wage: Minimum Wage, Wage: Overtime |

Our wage and hour attorneys at Spitz monitor decisions from Federal courts across the country regarding employers misclassifying employees as independent contractors and expanding eligibility under the Fair Labor Standards Act (“FLSA”). (Do Independent Contractors Have A Right To Overtime Pay?, Overtime Pay: Am I An Independent Contractor?, My Boss Calls Me An Independent Contractor, Am I?).

Under the FLSA and state laws across the country, all employees are entitled to minimum wage, and all non-exempt employees are entitled to overtime pay at time-and-a-half of their normal wage for all hours worked over 40 in a designated workweek. However, workers that are truly independent contractors are exempt from the FLSA. This exemption entices employers to classify workers that should be employees as independent contractors, in an attempt to pay overtime, pay to as few people as possible.

Who is an employee and who is an independent contractor?

Best Overtime Lawyer Answer: While deciding if a worker is an employee or an independent contractor can get a little complicated, (especially with the recent announcement from the U.S. Department of Labor regarding new rules on determining employee or independent contractor status under the FLSA) one thing is for certain: just because your employer classifies you as an independent contractor does not mean that you should be. Courts have developed the “Economic Realities” test uses six factors to determine if a worker is an employee or independent contractor. In Walsh v. Alpha & Omega USA, Inc., 2022 WL 2719984 (8th Cir. July 14, 2022), the United States Court of Appeals for the Eighth Circuit outlined the six factors in this test:

(1) Control. Does a worker have enough control over “a meaningful part of the business” or does the employer get to decide how, when, where, and for how long the worker does their job? Can the worker do the same job somewhere else in addition to working for the employer?

(2) Investment. Who is funding the job, who is providing the equipment, etc.

(3) Profit and Loss. Who is truly responsible for the worker making more or less profit based on the success of the job? As noted in a previous post, being in a position to earn more by working harder or volunteering for more shifts does not meet this requirement. Acosta v. Off Duty Police Services, Inc., 915 F.3d 1050, 1055 (6th Cir.2019).

(4) Special Skill. Does the worker use their own unique skillset to create opportunities for employment and to complete their work? Or, is the worker dependent on the employer to generate opportunities?

(5) Permanence and Duration. How long is the relationship between the worker and the employer? Typically, if it only for a specific job or an allotted period of time, this leans toward an independent contractor relationship.

(6) Work Essential to Business. Could the business continue to operate without the worker doing their job?

How do courts apply the Economic Realities Test?

Best Wage Theft Attorney Answer: In Walsh, the company in question hires drivers to transport patients to and from medical appointments. The company provided equipment like vans and electronic tablets to these drivers and paid for costs for internet service and insurance for the vans. The company paid their drivers the entire amount paid to them by their customers for these trips. But the drivers had to pay the company back for weekly expenses, a percentage of commissions generated by the drivers’ weekly trips, and numerous fees for their vehicles and tablets the company used to assign their routes. The company classified and paid these drivers as independent contractors, meaning they did overtime for any hours worked over 40, and their hourly rate would calculate out to less than the minimum wage per hour. (When examining what minimum wage an employee is entitled to, they are entitled to either the state or federal minimum wage, whichever is higher).

These drivers sued in Federal Court for violations of the FLSA’s provisions on minimum wage and overtime. Initially, the Trial Court ruled in favor of the drivers and found the company was liable under the FLSA. However, on appeal, the United States Court of Appeals for the Eighth Circuit held that this may have been pre-mature, and in applying the economic realities test for this specific claim, and this was a question that should be left up to the jury.

The Eighth Circuit held that three of the six factors from the Economic Realities Test were telling here: control, profit and losses, and work essential to business. For the control factor, the trial court concluded the company exercised significant control by assigning and pressuring drivers to accept trips, requiring drivers to operate during certain hours and ask for permission to take breaks, and both tracking and monitoring drivers’ travel logs. However, the 8th Circuit noted that a driver’s ability to turn down a trip is also important here as well.

The profit and losses factor has valid arguments both for and against employee classification.   While the company did set the drivers’ rates and facilitated trip assignments through an app, (limiting the drivers’ opportunity for profit or loss), the Eighth Circuit  held that because drivers, could transport more than one customer at a time to make trips more profitable counterbalanced this in favor of being an independent contractor.

Finally, in examining work essential to the company’s business to the company’ business, while they are registered as a special transportation services company, and their customers are dependent on drivers to make these drips, the company was unique in that it leased vehicles and equipment to drivers and sold dispatch subscriptions, with all of their revenue coming from charges to the drivers.

What should I do if I think I’ve been misclassified and not paid either minimum wage or overtime?

Best Overtime Pay Lawyer Answer: Ultimately, because of the validity of arguments both for and against these drivers being employees rather than independent contractors and vice versa, the 8th Circuit returned this case to the trial court and left these questions up to a jury to decide. However, a key takeaway for a potentially misclassified employee is these cases can be a toss-up, which is why it is crucial to call the right attorney when you have been denied minimum wage or overtime. If you believe that your employer is not paying you all of your wages or overtime your have earned, or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. (Read: What is the Spitz No Fee Guarantee?). The experienced wage and hour lawyers at Spitz will provide you with the top 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 right away. With these particular claims, waiting longer may mean losing out on the value of your claim.


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, “Should I be getting paid overtime?”, “Does my job have to pay me time and a half even if I’m paid as an independent contractor?”, “My paycheck does not have all the hours that I work” or “What do I do if the company that I work for requires me to work extra without being paid?”, 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 The Spitz Law Firm, Brian Spitz, or any individual attorney.

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