Employers often illegally classify their employees as independent contractors to avoid paying payroll taxes, overtime pay, minimum wages, unemployment insurance and workers’ compensation insurance. Federal and state laws provide protection for employees who have been misclassified as independent contractors.
To determine whether an individual is an employee or is actually in business for himself or herself as an independent contractor, courts examine a number of different factors. These factors include:
- The extent to which the services rendered by the alleged independent contractor are an integral part of the principal’s business. In other words, is the individual who is classified as an independent contractor engaged in the same or a different business or occupation than that of the principal’s business;
- Whether the relationship is permanent or for a short or fixed term;
- Whether the alleged independent contractor has a significant investment in facilities and equipment. In other words, does the worker provide his or her own tools and the equipment required to perform the work;
- The nature and degree of control the principal exercises over the worker. This factor examines whether the principal controls the work that is to be performed by the alleged independent contractor and the manner in which the work is performed;
- Whether the worker has the opportunity for profit or loss;
- The degree of skill, initiative, and judgment required to perform the work; and
- The degree of independent business organization and operation by the alleged independent contractor.
Under the FLSA, when an employee has been misclassified as an independent contractor, the employee is entitled to payment of overtime and minimum wages.
Occupations and Jobs Frequently Misclassified as Independent Contractors
- Construction industry employers often misclassify employees as independent contractors;
- Cable and satellite installation employers often misclassify employees as independent contractors;
- Janitorial companies often misclassify employees as independent contractors;
- Individuals who work from home-based businesses are often misclassified as independent contractors;
- Technology company employees are often misclassified as independent contractors; and
- Dancers and entertainers are often misclassified as independent contractors.
If you believe that you have been misclassified as an independent contractor, contact the Indiana employment lawyers at The Law Office of Robert J. Hunt, LLC for a free and confidential case evaluation.