Overtime Pay and Independent Contractors in the United States
A Harris Interactive® survey recently revealed that around half of the workers in the U.S. believe their employers are violating overtime pay laws. Unfortunately, many of them are correct. The federal government has increased the enforcement of overtime pay laws, and wage and hour claims is the fastest growing category within employment law. From 2003 to 2006, about 4,000 FLSA overtime pay lawsuits were filed – now the annual rate exceeds 7,000 per year. These lawsuits seek to recover hundreds of millions of dollars in unpaid overtime that workers have been deprived of. More and more employers are inaccurately categorizing employees as independent contractors to avoid paying them the overtime pay they deserve in compliance with federal and state laws. Misclassifying workers to avoid paying overtime is a disturbingly common trend, especially in industries that employ low-wage, vulnerable workers. Oftentimes, misclassified workers are deprived of overtime pay and even minimum wages and are forced to pay taxes that their employers have the obligation to pay. The Labor Department is committed to ensuring that employees are classified correctly and are receiving the correct overtime pay and wage according to FLSA and state laws. The DOL, however, has limited resources available for enforcement; so much of the task is undertaken by private overtime claim attorneys working on a contingent fee basis. “The Wage and Hour Division is vigorously examining those situations in which workers are in fact regular company employees, to ensure that they are paid the required minimum and overtime wage rates,” said a spokesman for the Department of Labor’s Wage and Hour Division. Oil and Gas Field Workers Oil and gas field workers are among the most commonly misclassified workers. Many oil and gas companies pay workers under a “day-rate” method, which means employees are paid a flat amount for each day worked regardless of how many hours they actually worked that day. This method of payment is permitted by law, but employees still must be paid a premium over and above the day-rate for any overtime labor. Another common pay scheme used with alleged independent contractors is payment of a straight hourly rate (straight time) for all hours worked each week, including all hours over 40. In a recent investigation by the U.S. Department of Labor’s Wage and Hour Division, Oilfield Drilling Equipment and Rig Co. Inc. in Houston, Texas agreed to pay $137,788 in back wages to 139 oil field employees. The company’s employees had been misclassified as independent contractors and therefore denied overtime compensation for all hours of their work, a violation of the Fair Labor Standards Act. Just because your boss, supervisor or HR tell you that you are not entitled to receive overtime pay, doesn’t make it true. If you feel that you are being misclassified as an independent contractor and aren’t getting the overtime pay owed to you, it’s important to contact an experienced overtime claim lawyer to get the money you deserve by law.