When you find employment in West Virginia, your main goal is to take home a paycheck. But when a company considers you an independent contractor, your pay may be less than it should. Under the Fair Labor Standards Act (FLSA), you may have entitlement to overtime wages.
Companies that hire employees as independent contractors try to save the cost of having regular employees. But giving workers a 1099 tax form instead of a W-2 does not mean they don’t have to pay overtime.
Employers don’t have to pay overtime to contractors
Many construction and oil and gas companies try to avoid paying overtime by hiring independent contractors. The businesses will agree to a set price for a project or to an hourly rate. But since the contractors aren’t direct employees, the rate doesn’t go up when the worker goes over 40 hours in a week.
Rules of the FLSA can challenge misclassification
However, the Department of Labor may still consider you a full-time employee. Under the FLSA, there is no defined line between contractor and employee. But if you sue for overtime, the courts will ask questions like:
- How long will you work for the company?
- How much does your work contribute to the company’s success?
- How much do you have to invest in equipment to do the job?
- How much does the company control your work?
If a court finds that your work is directly involved with the success of the company, they may consider you a regular employee.
Misclassified workers can lose out on extra pay
When companies don’t want to pay extra wages in overtime pay, they may try to get away with hiring workers as contractors. As the definition of contractor versus regular employee changes, they may violate FLSA overtime rules.
If you regularly work for one company as an independent contractor, improper classification may cause you to lose out on extra overtime pay.