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Employee or independent contractor? It matters for FLSA

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in Compensation and Benefits,Human Resources

True independent contractors aren’t covered by the Fair Labor Standards Act (FLSA). Employees are. But sometimes it’s hard to tell who is a true independent contractor and who isn’t. 

Recent case: Several former salespeople for an insurance company sued for unpaid wages and overtime, even though the company had classified them as independent contractors.   

The 5th Circuit Court of Appeals concluded the salespeople were employees after considering the extensive control the company had over the way they performed their jobs, the small investment the salespeople had in their equipment, how tightly the company controlled sales leads and generally how little control the salespeople had over making money. (Hopkins, et al., v. Cornerstone America, No. 07-10952, 5th Cir., 2008)

Final tip: Always have an attorney review independent-contractor agreements to make sure they stick.

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