When it comes to basic compliance with the Fair Labor Standards Act (), simply calling your hourly workers "outsourced employees" won't let you off the hook for overtime and minimum wage.
Whatever you call such workers, outsourced employees, independent contractors, etc., courts will look at their duties to determine if they are, in fact, employees, making them eligible for overtime pay. The more control you exert over the person's work, the more likely the person will be considered an employee, not an independent contractor. Tips: Require contractors to provide their own supplies and let them choose their work hours; don't tie them to office hours.
Recent case: A group of immigrant employees worked 60 to 84 hours a week delivering groceries to customers. They were paid only $3 an hour, without overtime.
The workers sued under the FLSA and state law, alleging that their employer failed to pay them the required minimum wage or overtime because it misclassified them as independent contractors. A court agreed, saying that even though the drugstore chain outsourced its delivery service to two companies, it could still be held liable. The court said all three companies misclassified the workers as independent contractors. (Ansoumana v. Gristede's Operating Corp., No. 00 Civ. 253 (AKH), S.D. NY, 2003)
Note: For a free report on the 20 factors that determine workers' status, Independent Contractor or Employee? How to Make the Call, go to www.you-and-the-law.com/extra.