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Contract workers: A possible misclassification of employees?

| Jul 11, 2013 | Wage & Hour Laws |

It has been said that the more things change, the more they stay the same. This could be an appropriate statement in the case of some employers who are attempting to avoid a misclassification of employees issue by claiming that workers were hired as contract workers. The minimum wage laws were passed over 75 years ago, but some employers in Texas and elsewhere are resorting to a new angle to avoid complying with them.

The dodge comes in the form of employers who classify workers as contractors as a way to slip past the minimum wage laws and to avoid paying overtime. According to watchdog groups and labor experts, increasing numbers of companies are resorting to this tactic to lower their labor costs. One labor advocacy group has referred to the strategy as the go-to mechanism for a wide range of fields, such as maintenance, construction, and transport.

Advocates for labor claim that the practice not only causes workers and their families to suffer, it also hurts federal and state governments through a loss of tax dollars. The amount of lost tax revenue has been estimated to be in the billions. It also hurts those law-abiding companies who do not misclassify employees as contract workers because it makes it difficult for them to compete with their competitors who are using the dodging tactic to keep their labor costs low.

In Texas recently, a dishwasher filed a suit against a food establishment that he claims paid him only $5.45 an hour, an amount which is $1.80 an hour less than the minimum wage in Texas. The restaurant responded to the suit by claiming that the dishwasher’s status was that of an independent contractor. The provisions of the Fair Labor Standards Act — which was designed to protect against misclassification of employees in a variety of labor situations such as minimum wage amounts and overtime pay after 40 hours — could possibly be sidestepped by employers who misclassify workers. Employees who believe that they are not being paid properly or who were denied overtime pay will find it in their best interests to seek outside professional advice and assistance from professionals who are knowledgeable and experienced in matters of labor law.

Source: Huffington Post, “Employers Still Dodging Minimum Wage Law 75 Years After Its Passage,” Saki Knafo, June 25, 2013

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