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Fair Labor Standards Act: Independent Contractor or Employees

One of the most important and least well-understood elements of the Fair Labor Standards Act (FLSA) concerns the Act’s definition of “employee.” So, who exactly is an employee? First of all, just because an employer says a worker is an independent contractor, not an employee, does not make it true, especially for FLSA purposes!

Millions of workers nationwide are misclassified. Here’s the crucial point: An employee under the FLSA must be paid overtime for every hour worked over 40 hours at a time and a half their usual rate. Independent contractors don’t have to be paid anything extra for overtime. Unscrupulous employers save billions nationwide by misclassifying their employees. Other employers simply don’t know the law. The test courts apply for the FLSA is different than the test used by the IRS for tax purposes. And the FLSA test is much more likely to find a worker is an employee than any other test used by the federal government. A court will employ a six-factor “economic reality” test to determine whether a worker is an employee or independent contractor under the FLSA.

To determine whether an Ohio worker is an employee or an independent contractor, courts follow the Sixth Circuit Court of Appeals multifactor test, which considers:

  • The permanency of the relationship between the parties
  • The degree of skill required for rendering the services
  • The worker’s investment in equipment or materials for the task
  • The worker’s opportunity for profit or loss, depending on his or her skill
  • The degree of the alleged employer’s right to control the manner in which the work is performed
  • Whether the service rendered is an integral part of the alleged employer’s business

(See Donovan v Brandel, 736 F2d 1114, 1116 (6th Cir. 1984) (citations omitted)). In many cases, a worker will be classified as an employee if the employer has the right to control not only what work will be done, but also how the worker will do it.


Throughout the United States, according to the Bureau of Labor Statistics, more than 10.3 million workers are classified by businesses as Independent Contractors. That number represents over 7% of the work force. However, the Department of Labor estimates that up to 30% of businesses misclassified employees as independent contractors. Other government studies estimate that the misclassification of workers has expanded by 50 percent. As a result, potentially millions of workers are being denied benefits and proper wage payments. Misclassification in Ohio is especially rampant in the construction industry and other blue-collar occupations.

To determine whether or not you are an employee under the FLSA, contact a wage and hour attorney, especially if you are currently classified as an independent contractor and work more than 40 hours a week. The wage and hour attorneys of Scott & Winters Law Firm, LLC, are happy to answer your questions and advise regarding your particular circumstances. Contact us today to learn more about your status under the FLSA and whether your rights have been violated.