Independent Contractor Trend Raises Overtime Pay Issues

Large, mid-size and small companies alike are increasingly turning to independent contractors to replace their employees.  According to the Wall Street Journal in a September 14, 2017 article entitled The Second Class Office Workers, “[m]illions of contractors now do heavy lifting, paper pushing and other jobs for American companies that have replaced employees with outside workers.”  The Journal also reported that “[w]ithin the next four years, nearly half of the private-sector workforce in the U.S. will have spent at least some time as a contractor, temporary employee or other type of outside job.”  This trend is gaining momentum because companies are attempting to avoid paying worker’s compensation insurance, benefits such as retirement and health insurance, payroll taxes, Obamacare taxes and other state and local taxes.  It is also being used by companies to avoid paying their workers overtime.

However, this practice is often a violation of federal law.  The Fair Labor Standards Act requires most employees to be paid overtime for each hour worked above forty in a given week.  And just because a worker is labeled as an independent contractor does not mean that the worker necessarily is one.  The issue is whether the worker is truly a bona fide independent contractor – if so, the company can rightfully deny the worker overtime pay, but if not, the worker (assuming he or she does not otherwise meet any of the narrowly-construed exemptions to overtime pay under the FLSA) is entitled to overtime pay.  The Department of Labor identifies six factors in assessing whether a worker is truly an independent contractor:

1) The extent to which the work performed is an integral part of the employer’s business.

2) Whether the worker’s managerial skills affect his or her opportunity for profit and loss.

3) The relative investments in facilities and equipment by the worker and the employer.

4) The worker’s skill and initiative. Both employees and independent contractors may be skilled workers.

5) The permanency of the worker’s relationship with the employer.

6) The nature and degree of control by the employer.

None of these factors is singularly determinative, but as a general matter, if the worker is told by the company where to go for work, when to go to work, what assignments to perform, and how to perform them, the worker will generally not be found to be an independent contractor, and thus may have a claim for unpaid overtime.

It is this author’s experience that the oil and gas industry is following the general trend and increasingly using independent contractors in an effort to avoid paying overtime to its workers.  If you or a family member or friend has been classified as an independent contractor in the past three years and denied overtime pay, consider speaking with an experienced overtime attorney.  Josh Borsellino is an overtime attorney licensed in Texas that represents workers who have been misclassified as independent contractors.  Josh fights for the rights of workers that have been denied overtime pay.  Josh accepts overtime cases on a contingency basis, meaning that he only gets paid if money is recovered from the company being sued.  Josh provides free consultations for anyone with questions about overtime pay.  He may be reached through his online contact form or at 817.908.9861.