Independent Contractor? Don’t Let the Label Fool You (or Cost You Overtime Pay)!

The Department of Labor is working with state agencies, zeroing in on certain industries, and weighing in on private lawsuits, in an attempt to end the common and illegal practice of misclassifying workers.  As businesses try to save money and cut back on employee costs, hiring new talent as independent contractors is becoming more and more common to avoid expenses such as mandatory overtime pay and health insurance. Many businesses are abusing the system and workers’ rights – going against overtime pay laws and misclassifying regular employees as independent contractors. Employment law can be complex, and it often requires looking at a lot of determining factors on a case-by-case basis to define someone as an independent contractor. The degree of control exercised over the worker is a key focus – the more restricted a worker is, the more likely they are to be classified as an employee rather than an independent contractor. Workers who are classified as independent contractors typically do not receive benefits such as healthcare and are generally not subject to workplace protections such as the Family and Medical Leave Act and the Americans with Disabilities Act. Employers in turn typically do not pay into worker’s compensation or unemployment insurance on behalf of those workers. Hiring independent contracts has recently become a more common practice. Nearly one in five small business owners, 22 percent, are more likely to bring in an independent contractor today than a full-time employee, according to the SurePayroll Small Business Scorecard for August. Of those who said they were more likely to hire independent contractors, 75% said it was simply because they don’t currently need a full-time person to fulfill specialized roles. These specialized roles included mainly marketing, information technology, or administrative work. According to Katherine Bissell, a deputy solicitor at the Department of Labor, “Our goal is not to get rid of independent contractors. If it’s an appropriate classification we have no qualms with that.” Employers who misclassify employees as independent contractors to avoid paying overtime are where the problems occur. Whether you’re an oil and gas field worker or involved in the medical/healthcare industry, it’s important that you’re aware of your classification and the rights that come along with it.

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