Both the Minimum Wage Act of Arkansas and the Fair Labor Standards Act stipulate that “employees” must be paid a set minimum wage and that all hours worked in excess of 40 must be paid at time-and-one-half the “employee’s” regular rate of pay or overtime pay.

Wrongly Identifying an Employee

Unfortunately, some employers seek to avoid or evade their minimum wage and overtime duty by misclassifying or wrongly identify their workers as “independent contractors.” Such misclassification also allows the employer to avoid paying its share of social security and Medicare taxes, unemployment compensation tax, and worker’s compensation insurance. Also, as stated above, if an employee is misclassified they could receive an incorrect payment of wages.

Thus, it is important that a worker is classified correctly.

 Independent Contractor

Signing an independent contractor agreement does not make you an independent contractor. It may be just one relevant fact in determining the relationship of the parties. You are not an independent contractor simply because you work off-site or from home either. Whether you are paid by cash or by check, on the books or off, you may still be an employee under the FLSA.

This misclassification of an employee as an independent contractor, may cause you to be denied benefits and protections to which employees are legally entitled.

Among others, these are the benefits and protections that employees are entitled to:

• The right to minimum wage, overtime pay

• The right to unpaid, job-protected family and medical leave

• Certain anti-discrimination and anti-retaliation protections

• The availability of workers’ compensation if you are injured on the job

• The availability of unemployment insurance (UI)

• Employer payment of half of the Social Security and Medicare Taxes

 Determining if you are an Employee or Independent Contractor

To determine whether a worker is an independent contractor or an employee, courts look at the “total activity or situation.” There is no single rule or test. Factors considered include how much control the employer has over his employee or the permanency of the relationship in deciding whether a worker is an independent contractor or employee. Other factors considered are the worker’s opportunity for profit or loss and the extent of which the services rendered are an integral part of the principal’s business. You are an employee if your work falls within a law’s definition of employment.

If you have questions concerning whether you are classified appropriately, you can find more information at the following links:
1- https://www.dol.gov/agencies/whd/flsa/misclassification/myths

2- https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/misclassification-facts.pdf

If you feel that you are not correctly identified at your place of employment, contact an attorney of your choice to help you determine the best action. If you would like our assistance, call our Helpline at 501-376-3423.

AUTHOR: TREVOR TOWNSEND, STAFF ATTORNEY FOR THE CENTER FOR ARKANSAS LEGAL SERVICES