Are You An Employee or Really an Independent Contractor?

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How to Distinguish Between Independent Contractors and Employees

Let’s say you work for someone 40 hours a week and the boss decides to label you an independent contractor. They do so because they don’t want to pay you benefits. But you feel like a staff member because you have to tow the line. Or what if the opposite is true: You work for yourself, but the line is blurry, and the boss labels you a management employee so as to not pay you extra pay for the extra work you have done.

So which are you – an employee of an independent contractor?

Let’s start with the issue in question. Your classification is not the issue. Your job, duties, and status are.

Be Careful! Bosses cannot control independent contractors as they do regular staff.

Plenty of employers classify employees as independent contractors, even though they are clearly employees. Now, why do they do that? The reason is that it costs much less to hire an independent contractor – as you well know, independent contractors are not paid benefits, or workman’s comp, or social security, etc.

But, that said, work bosses cannot control independent contractors as they do regular staff, so they sometimes think the solution is to hire a person, treat them like an employee, but label them an independent contractor. That way, they get to boss the person around but pay them less.

Even though an employer may try and get away with that, it’s illegal, and the penalties are severe. Here’s how to know if you are an independent contractor or an employee:

Independent Contractors Are Entitled to the Following:

• Set their own pay
• Make their own schedule
• Decide when and where to work
• Work for several businesses
• True independence in terms of their working life/schedule

If you can’t do all of the above, you are probably an employee, no matter what you are called.

When Must An Employee Get Paid Overtime?

Another sneaky management trick, aside from the mislabeling of someone as an independent contractor when really they are not, is to label an employee “management” even though they are not. Why would they do that?

Money, of course.

Some employees are exempt from overtime pay requirements and others are not exempt. “Non-exempt employees” must be paid at least the minimum wage (your state law’s minimum wage may be higher than the current federal amount) when working 40 hours a week or less, and time and a half for work over 40 hours.

“Exempt employees” typically hold managerial, executive, administrative, professional or outside sales positions. They usually get a salary in equal weekly, bi-weekly, or monthly payments. But they DO NOT get overtime.

Therefore, if you work for someone, are not independent, are not really management, and are paid by the hour, you are entitled to overtime, even if you are labeled management.

Bottom line: when working on a time-consuming project beware of the company that tries to mislabel you for their own purposes.


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