Under the federal labor law, when an employer-employee relationship exists, the employee must be paid at least the Federal minimum wage of $7.25 per hour and in most cases overtime at time and one-half his/her regular rate of pay for all hours worked in excess of 40 per week.
The ride-share company Uber has agreed to pay $20 million to settle a lawsuit accusing the ride-share service of classifying drivers as contractors to avoid paying them minimum wage and providing benefits: https://phys.org/news/2019-03-million-settlement-uber-driver-lawsuit.html
wh Law has filed a lawsuit against Uber for overtime. Click here to read more about it: https://arktimes.com/arkansas-blog/2019/05/08/uber-facing-pushback-from-drivers
The United States Department of Labor has determined that:
Receiving a 1099 does not make you an independent contractor under the federal labor law.
Signing an independent contractor agreement does not make you an independent contractor under the federal labor law.
You are not an independent contractor under the federal labor law merely because you work offsite or from home with some flexibility over work hours.
Whether you are paid by cash or by check, on the books or off, you may still be an employee under the federal labor law.
Even if you are an independent contractor under another law (for example, tax law or state law), you may still be an employee under the federal labor law.
Having an employee identification number (EIN) or paperwork stating that you are performing services as a Limited Liability Company (LLC) or other business entity does not make you an independent contractor under the federal labor law.
“Common industry practice” is not an excuse to misclassify you under the federal labor law.
(1) One of the most common problems is in the construction industry where contractors hire so-called independent contractors, who in reality should be considered employees because they do not meet the tests for independence.
(2) Franchise arrangements can pose problems in this area as well. Depending on the level of control the franchisor has over the franchisee, employees of the franchisor may be considered to be employed by the franchisor.
(3) A situation involving a person volunteering his or her services for another may also result in an employment relationship. For example, a person who is an employee cannot "volunteer" his/her services to the employer to perform the same type service performed as an employee. Of course, individuals may volunteer or donate their services to religious, public service, and non-profit organizations, without contemplation of pay, and not be considered employees of such organization.
(4) Trainees or students may also be employees, depending on the circumstances of their activities for the employer.
(5) People who perform work at their own home are often improperly considered as independent contractors.
True independent or gig work consists of income-earning activities outside of traditional, long-term employer-employee relationships.
In many cases, temp-agency and subcontracted work is W-2 work, but the W-2 is issued by the contracting company rather than the company where the worker reports to work.
Merely because you are not given a W-2 and instead a 1099, does not make you an independent contractor or gig worker.
Yes. Chris Burks is an experienced employment law attorney. He is a member of the National Employment Lawyers Association. Chris has represented thousands of employees in employment law cases across the country. His articles on employment law have been published. He knows the employee misclassification laws well and will not stop fighting for your rights.