OVERTIME WAGE LAW: INDEPENDENT CONTRACTOR VS. EMPLOYEE

Under the federal overtime wage law, i.e., the Fair Labor Standards Act (“FLSA”), it is not always clear whether the law considers someone an “employee,” and it is not always clear who the law considers someone’s “employer.” Some people, for example, perform services for others while remaining self-employed as independent contractors. Different laws construe the terms “employee” and “independent contractor” differently. A common issue in FLSA litigation `is whether the plaintiff is truly an “employee” or an independent contractor. The consequences of this legal determination can be significant. A determination that the person is not an employee can nullify his or her entire overtime wage claim. Peter Mavrick is a Fort Lauderdale employment attorney who defends businesses against employment claims, including claims for wages.

The court of last resort for most federal law claims, including the FLSA, is the United States Court of Appeals for the Eleventh Circuit. The Eleventh Circuit has issued legal instructions for trial court determinations of whether a person is an employee or independent contractor. Using these jury instructions, Mr. Mavrick successfully represented a Fort Lauderdale employer in a jury trial victory. The jury determined that Mr. Mavrick’s client never legally “employed” the plaintiff, and therefore owed him no overtime wages. The Eleventh Circuit considers the following factors to determine the plaintiff’s legal status as employee or independent contractor:

(1) Who controls the plaintiff’s work? In an employer/relationship, the employer has the right to control the employee’s work, to set the means and manner in which the work is done, and set the hours of work. In contrast, an independent contractor generally must accomplish a certain work assignment within a desired time, but the details, means, and manner by which the contractor completes that assignment are determined by the independent contractor, normally using special skills necessary to perform that kind of work.

(2) How is the plaintiff paid? An employer usually pays an employee on a time worked, piecework, or commission basis, and an employer usually provides vacation or sick time, insurance, retirement, and other fringe benefits to the employee. An independent contractor is ordinarily paid an agreed or set amount, or according to an agreed formula, for a given task or job, and no benefits are provided.

(3) How much risk or opportunity does plaintiff have? An independent contractor is generally one who has the opportunity to make a profit or faces a risk of taking a loss. But an employee is generally compensated at a predetermined rate, has no risk of loss, and has social security taxes paid by the employer.

(4) Who provides plaintiff’s tools, equipment, and supplies? An independent contractor usually provides the tools, equipment, and supplies necessary to do the job—but an employee usually does not.

(5) How does plaintiff offer services? In-dependent contractors generally offer their services to the public or others in a particular industry, have procured the necessary licenses for performing their services, and may have a business name or listing in the phone book. Employees ordinarily work for only one or just a few employers, and do not have business names or listings.

(6) What is the parties’ intent? The parties’ intent is always important. But the description the parties themselves give to their relationship is not controlling—substance governs over form.

The Eleventh Circuit requires federal court juries to consider all the circumstances surrounding the work relationship. In other words, no single factor determines the outcome. However, the extent of the right to control the means and manner of the worker’s performance is the most important factor. As a Fort Lauderdale employment lawyer, Mr. Mavrick has successfully used the foregoing legal rule to persuade a jury to deny wages to a person claiming to be an “employee” when federal law deemed the person not to be an employee.

The Fort Lauderdale employment litigation attorneys at the Mavrick Law Firm have successfully represented many businesses in whistleblower claims in the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeal. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.