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Make sure independent contractor honors pay obligations

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in Compensation and Benefits,Human Resources

If your business is seasonal, you may rely on an independent contractor to provide extra workers during crunch times. Whether it’s harvesting a crop, having the office cleaned or counting inventory, you must take steps to ensure your contractor pays his or her employees minimum wage and overtime.

Here’s why: Under the Fair Labor Standards Act (FLSA), you could be deemed a “joint employer” along with your independent contractor. That means you’re both responsible for complying with the FLSA.

Ensure compliance by holding back some of the money due the contractor until you know he or she paid the employees for work they performed on your premises. Also, retain the right to an audit so you can see that they’re paid at least the minimum wage, plus any overtime that’s due.

Recent case: An independent contractor recruited Daniel Reyes and his family to leave Texas for a Midwestern farm operation where they detasseled corn in the field. Remington Hybrid Seed Company contracted with the independent contractor, but supplied everything Reyes and his family worked with in the fields.

Reyes said he wasn’t paid minimum wage and sued Remington. He claimed Remington also was his employer and therefore liable for FLSA violations. The court agreed. It said that the FLSA broadly defines “employee” to include someone hired by an independent contractor to work at the company’s premises. The court suggested that Remington should have held back enough money or obtained a performance bond to ensure the employees were paid. (Reyes, et al., v. Remington Hybrid Seed Company, No. 05-1628, 7th Cir., 2007)

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