Recognizing Employee Misclassification

It can be frustrating to have a job title that doesn’t accurately describe what you do for the company. Sometimes, vague job titles are just the result of corporate jargon or PR euphemisms.

But there are also many instances in which employees are misclassified specifically to save the company money in unpaid overtime, and this practice is illegal. At Moreland Verrett, P.C., we regularly represent clients who have been misclassified in ways that rob them of overtime pay. Below are some of the most common types of employee misclassification:

Are You An Employee Or An Independent Contractor?

Many companies have learned that labeling regular employees as independent contractors (ICs) can save money because ICs are not entitled to overtime pay, workers’ compensation, unemployment insurance, or basic protections like minimum wage. Companies also pay less in payroll taxes for ICs than for employees, so misclassifying workers as ICs is a win-win for the employer.

What many employers don’t realize, however, is that the differences between an independent contractor and an employee are not just matters of opinion. The law specifies clear criteria for classification, and the U.S. Department of Labor has issued explanatory guidelines.

If you believe you have been misclassified as an independent contractor, we may be able to help you seek the pay and benefits you are legally entitled to.

Being A Manager In Name Only (Exempt Vs. Non-Exempt Workers)

While minimum wage laws and overtime requirements apply to most regular employees, companies are exempt from these requirements when compensating managers and certain other workers. If you have been given the title of “manager,” you may have been told that you are now exempt and will no longer receive overtime pay.

But as with independent contractors, the laws make clear that simply calling an employee a “manager” or “administrator” doesn’t make them into one. There are specific criteria that need to be met in order to deny overtime pay or other benefits to these workers. If you have been mislabeled, you may be entitled to additional compensation.

Is It An Unpaid Internship Or Just Free Labor For The Company?

According to the Department of Labor, one of the most important guiding principles of any internship is that it is for the benefit of the intern — not the company. Unpaid internships must provide valuable experiences and cannot be used to replace or supplement the work of regular employees.

Abuse of unpaid internships tends to increase during recessions and tough economic times, but can and does occur in any economic climate.

Lying About The Law Or Hiding Behind ‘Company Policy’

It is a persistent myth that salaried workers are not entitled to overtime pay. In addition to misclassifying some workers as managers, companies often simply say that no salaried workers are entitled to overtime, or that “company policy” forbids overtime pay (even if overtime work is expected).

This is wrong. Simply labeling an employee as “salaried” or paying that employee a salary does not automatically disqualify an employee from overtime.

Learn More About Your Rights In A Free Consultation

Your specific compensation will depend on factors such as your position within the company and whether that title is justified by the work you actually do. The best way to understand your rights and legal options is to discuss your case with an experienced employment law attorney.

Moreland Verrett, P.C. serves clients in the Austin area and throughout Texas. We are pleased to offer free initial consultations to all prospective clients. To discuss your case for free with an experienced employment lawyer, call us at 512-782-0567. You can also send us an email.