Misclassification of Employees Under FLSA

The law enforcement officials of the State Labor Department in New York have built quite a reputation in recent years for coming down hard on organizations that misclassify workers.

There have been 31,000 misclassification cases in New York since 2007, resulting in $25.5 million in fines, penalties, and unpaid taxes which have been reported by the Department.

This clearly shows that local, state, and federal regulators are serious about the issue of employers misclassifying their workers especially in the state of New York.

Recognition as an Employee under the Law

As per New York law, an individual would be recognized as a ‘legitimate’ employee of an organization when their job performance, work hours and duties are supervised by the employer. In this type of case, all tools for the individual to complete their job are also provided by the employer.

In contrast when an individual is hired as an independent contractor, they already have an established business, they work their own hours, use their own tools and complete the work without any supervision from the hirer. However, because these differences are subjective in nature an employer can in good faith erroneously or intentionally misclassify a worker.

If you feel that your employer has misclassified you as a worker or if you have questions regarding your status then you should get in touch with an accomplished employment attorney in New York who will provide the right legal advice and work hard to protect your rights.

Classification under the FLSA

The Administrator of the Wage and Hour Division of the US Department of Labor have recently issued an Interpretation which provides guidance on workers being classified as an employee under the Fair Labor Standards Act (“FLSA”) by the Department of Labor.

Instead of using economic labels to determine a worker’s classification, a multi-factorial ‘economic realities test’ is used by the courts to classify a worker as an employee or an independent contractor under the FLSA.

A worker can be classified as an employee if he or she is economically dependent on the employer. The rules around classifying a worker as an employee or an independent contractor can be quite confusing.

Therefore, it is vital that you seek professional advice from a New York and New Jersey based employment attorney such as Emre Polat to safeguard your rightful interests.

The below-mentioned factors can be used as a guide to determine the classification of a worker in New York:

Whether the work performed is integral to the core business

If the work performed by a worker is in conformance to the core business of an organization, then he can be classified as an employee. An example of this would be a carpenter working for a construction company. Also, the worker is more or less economically dependent on the employer in such a case.

Opportunities for a worker to be a part of the profit/loss on basis of managerial skills

A worker is more likely to be classified as an independent contractor if he has the opportunity to make independent decisions and use his managerial skills which have an impact on the profit and loss of the business.

The extent of relative investment between worker and employer

If a worker has undertaken a risk or made any investment which is equivalent to what the employer has made in the overall business, then the worker is an independent contractor. However, he should have made a significant investment of a magnitude similar to that of the employer in the overall business.

Whether any special skills and initiative is required for the work performed

Skills alone cannot classify a worker as being an independent contractor. To be an independent contractor, an individual should use these skills in an independent way which demonstrates business-like initiative.

Working relationship status between an employer and a worker

The permanency of relationship between worker and an employer can define whether he is an employee. A worker tends to work for a longer period of time as compared with an independent contractor who stays just until that particular project is completed.

However, the lack of permanency by itself cannot justify the classification of a worker as an independent contractor. The reasons behind lack of permanency should be reviewed judiciously.

Employer’s control over the worker

The degree of control exercised by the employer should be carefully looked into while establishing worker status. An independent contractor would control all meaningful aspects of his or her work as if he was conducting his own personal business.

As per the law, most of the workers are classified as ‘employees’ under the broad definition of employment by FLSA. On top of this, all employers must carefully look at their working relationships with workers in order to avoid a misclassification under FLSA.

The Department of Labor can impose penalties, and order back pay for minimum wages and even overtime which is due to an employee who has been misclassified as independent contractor.

Protect your rights in the workplace by enlisting a New York City Attorney

You have rights as a worker, which are protected by the law. If you think your employer is purposefully misclassifying you as an independent contractor in order to avoid paying benefits and compensation, then you should seek legal assistance by calling an attorney at 212-480-4500.