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. One of those common methods of misclassification is labeling a worker as an “independent contractor” and then not paying overtime for hours worked over forty in a week.

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.

Courts will consider the following factors to determine if you are an employee (entitled to overtime) or an independent contractor (not entitled to overtime):

  • The degree of control exercised by the employer;
  • The extent of the relative investments of the worker and the employer;
  • The degree to which the worker’s opportunity for profit or loss is determined by the employer;
  • The skill and initiative required in performing the job; and
  • The permanency of the relationship.

No single factor is determinative—together the factors are evaluated to gauge the economic dependence of the worker.

We often hear about work situations that look, smell, and sound like employment relationships. But for whatever reason, the worker is classified as an independent contractor and is, as a result, shorted thousands of dollars in unpaid overtime. 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.

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.