The Fair Labor Standards Act (FLSA) makes a distinction between an “Employee” and an “Independent Contractor.” This can effect issues such as how you are paid, taxed, or even eligibility for employee benefits. More importantly, it can determine your protections under the FLSA. The Department of Labor has created an “Economic Realities” test to help you define your status under the FLSA. Generally speaking, The “Economic Realities” test determines your status is dependent on two basic concepts:
1. The level of control you have over your work vs. control by your Employer. Does your employer decide when, where and how you work? You are likely an employee. If an employer is only concerned with getting a final product from you, with no restrictions on how you worked on it, you may be an Independent Contractor. This is a very nuanced and individualized distinction that must be decided on a case by case basis.
2. Your ability to profit based on your own initiative and, more importantly, personal investment. Increasingly, workers are having to do additional trainings and continuing education to level up their skills and remain current. If you are paying for these types of training, and your employer is not, you may be an independent contractor.
There are additional markers used within the test that will help you and your employer define your status more concretely, such as:
It is important for both you and your employer to clearly define the status of your employment. Knowing where you stand is necessary to knowing in what ways you are (and are not) protected under the FLSA. In most cases of misclassification, a worker is incorrectly identified as an “independent contractor” when they are, in effect, employees (which can unfairly benefit the employer, as they are not required to provide the same benefits to an Independent Contractor.) Most importantly, this matters as an employee has more clearly defined protections than an independent contractor under the FLSA. If you are unsure of your status, or feel you are being misrepresented, you should speak with an employment Lawyer to help you navigate the process and protect your rights.
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