Learn why being classified as an Independent Contractor can lead to wage theft for your paycheck.

Tips for employees: How to know if your employer has misclassified you as an Independent Contractor: Learn 3 factors that affect employee FLSA status.

One of the most common tactics employers use to save money and avoid paying federal taxes is to label their employees “independent contractors.” Many employees are misclassified under this term, but they have no idea how it affects their paycheck.

Many times, it is not immediately clear whether an employee is an independent contractor or an employee. The facts of your particular work situation, including your job duties will help to determine the answer to your case.

3 Factors to determine employee versus independent contractor classification

Every case has to be looked at independently, but there are some broad tests that help clarify FLSA status. Three factors look at the amount of control in a work setting:

• Behavioral control – If an employer has the right to control how the work is done, the individual is probably an employee. When and where the work is to be done, what tools to use, and how to perform the work are factors considered when determining employee versus independent contractor classification.
• Financial – The worker’s opportunity for profit or loss is an important factor. Independent contractors generally advertise their services, maintain a visible location, and are available to work for other employers. An independent contractor often has a significant investment in the equipment used to perform a job and is usually paid a flat fee.
• Relationship – A contract that states a worker is an independent contractor does not mean this relationship is created.

Some of the questions used to determine independent contractor status are:

1. How much control does the employer have over how and when the job is done?
2. When you go to your job site, whether at construction site or a dedicated worksite, like a call center, do you have a supervisor?
3. Are you paid by the hour, on salary or by the job?
4. Are your duties performed for the employer’s benefit on an ongoing or permanent basis?
5. How much have you personally invested in the tools, equipment and materials you use to do your job?
6. Is your work an integral part of the employer’s business?

If you are classified as an independent contractor by your employer, but you feel you are working as an employee, learn your FLSA rights by ordering a FREE copy of our wage and overtime guide today. Pay close attention to Chapter 9: Have you been misclassified as an independent contractor? Find out how you may be cheated out of wages.

If you really want to delve deep into the legalese of independent contractor status, you may be interested in reading the attached legal brief we filed in an actual case. In this case, we represented a group of about 20 employees whose supervisor told them they were independent contractors and, therefore, were not entitled to overtime pay. However, the company controlled virtually all aspects of their work. We filed a Motion for Summary Judgment asking the court to declare our clients as employees. The case settled prior to the court ruling on the motion.