The federal Fair Labor Standards Act () requires paying employees at least the minimum wage, plus overtime for hours worked over 40 per week. Employers can’t avoid that obligation by defining an employee as an independent contractor and providing a 1099 form instead of collecting payroll taxes.
Under the FLSA, it’s not the job title or even some understanding between the employer and worker that matters, but business reality. If an employer controls how the job is done, chances are the worker is an employee covered by the FLSA.
Recent case: Vera and Krystal worked as supposed independent contractors for a company that runs group homes for the disabled. Each received a Form 1099 showing hourly earnings with no tax or Social Security withholdings.
They were told what hours they had to be present to care for disabled residents. The women had to be at work in the homes from the time the residents returned from a day program and through the night—approximately from 3 p.m. until 9 the next morning.
However, because lights-out was at 10 p.m. and wake-up was at 6 a.m., the residents were presumed to be sleeping during those hours, for which the women were not paid. Each worked shifts that covered 57 hours one week and 76 hours the next.
They sued, alleging they were really employees and not independent contractors.
The court agreed. It said the employer controlled how and when they did their jobs and set the hours. It didn’t matter whether the parties agreed to be labeled independent contractors.
The court said the women had to be paid for hours worked while the residents slept and were entitled to overtime for hours over 40 per week. (Chapman, et al., v. A.S.U.I. Healthcare of Texas, No. H-11-3025, SD TX, 2012)