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FLSA Overtime Pay Exemptions: Employee vs. Independent Contractor

The Fair Labor Standards Act or FLSA ensures that employees working in the United States are able to receive fair and equal compensation. The FLSA is responsible for establishing the federal minimum wage and regulations about overtime pay, among others. Of course, as with most laws governing a certain aspect of social life, the FLSA has certain exemptions regarding those eligible to receive the overtime pay rate.

Among those exempted from the FLSA rules on overtime pay include professionals in executive, supervisory, and outside sales positions. Independent contractors who have full control of their own work hours are also illegible from receiving overtime pay. Unfortunately, as FLSA lawyers from William Kherkher have pointed out, there are some employers that intentionally misclassify their employees in order to bypass FLSA regulations and cut on costs. As such, many employees are misclassified as independent contractors when, in fact, they are subject to fixed work schedules and disciplinary restrictions imposed by their employers.

The following are just some of the misconceptions that around the difference between being an employee and an independent contractor. First, any individual that follows procedure and renders work of an employee may not be misclassified as anything else, even if he or she may have signed a contract agreeing to it. Similarly, as noted by the Wage and Hour Division of the Department of Labor, signing any type of independent contractor agreement doesn’t automatically classify an employee as an independent contractor following the definitions delineated in the FLSA. It’s also important to remember that being an independent contractor isn’t automatically determined having the ability to work offsite and exercise flexibility over your schedule. In the same light, even individuals registered as independent contractors in their tax forms may still be considered an employee.

All in all, individuals can only be considered an independent contractor if they have full control over how the work they were hired to do will be accomplished. This means that they aren’t subject any schedule, protocol, or disciplinary procedures in performing their tasks. An easy example of an independent contractor is an interior designer. If a homeowner hires an interior designer to decorate their living room, they only give the designer an idea of how they want the space to look and feel. Accomplishing this goal, which could probably include moving around furniture or installing new shelves and curtains, will be up to the designer.