Independent Contractors: Do You Have an Unpaid Wage Claim?

You may be entitled to unpaid wages, even if your employer calls you an independent contractor.

Were you hired as an “independent contractor,” even though you work full time, doing tasks that are essential to the company's services or products? If so, you may actually be an employee who has been illegally misclassified as an independent contractor. This means, among other things, that you may have a claim for unpaid wages against the company you work for.

Some employers misclassify employees as contractors to avoid their legal obligations as employers, including withholding and contributing to payroll taxes, providing workers’ compensation insurance, and paying into the state unemployment insurance program. Some employers are also trying to skirt their responsibilities under wage and hour laws, including the obligation to pay minimum wage and overtime, provide meal and rest breaks, and issue paychecks in a timely manner.

Whether your employer is intentionally breaking the law or has accidentally misclassified you, you are entitled to the wages you would have been paid if you were properly classified as an employee.

Are You Misclassified as an Independent Contractor?

Generally speaking, a true independent contractor is in business for himself or herself. The contractor has the right to accept or refuse work, to work for as many (or as few) clients as he or she wishes, to set the price of work, to decide how to do the work, to determine where and when to work, and much more. Independent contractors also typically work away from the client's place of business, supply their own tools and equipment, and provide a specialized skill. For example, an independent repair person can have 20 clients in a single week, can decide whether or not to take a particular repair job, can negotiate a schedule and price for doing the work, and is hired to do a job precisely because of the contractor’s special expertise and skill, which the client either lacks or would rather pay for.

In contrast, an employee generally works for one employer at a time (or possibly two), at the employer's place of business, following the employer’s rules and schedule, for a salary or wage the employer offers, subject to the employer’s supervision and direction, on tasks assigned by the employer that are an integral part of the employer’s business. An employee is not running a business or exercising discretion as to how, when, and where to do the work. An employee is also entitled to be paid whether or not the company makes money, but the employee typically has no right to a share of the profits when things are going well (unless there is a contract to that effect).

One of the primary criteria government agencies and courts look at in deciding whether a worker is an employee or a contractor is the work itself. If the worker is providing the services or products that the company exists to provide, the worker is much more likely to be an employee. For example, some state labor departments have recently found that Uber drivers should be classified as employees, in part because the work they do – picking up and delivering passengers – is central to the company’s core business. On the other hand, if the worker is providing a one-time or tangential service, the worker may be an independent contractor. For example, if the company hired someone to paint its offices or create a new ad campaign, that person might be fairly classified as an independent contractor.

Potential Wage Claims If You Were Misclassified

If you have been misclassified as an independent contractor when you really are an employee, you might have claims against your employer for unpaid wages. Depending on your situation and your state’s wage and hour laws, your employer may owe you the following unpaid wages:

  • Minimum wage. As an employee, you are entitled to at least the minimum wage for each hour you work. You are entitled to the highest applicable minimum wage, whether federal (currently $7.25), state, or local. Many states and localities now have minimum wages that are higher than the federal rate.
  • Overtime. Employees are entitled to overtime, unless they fit into a specific exemption based on their job duties and salaries. Employees who are entitled to the overtime premium must be paid time-and-a-half when they work over 40 hours in a week. A few states have additional overtime requirements, such as a daily overtime standard. For example, in California, you have the right to overtime once you work more than eight hours in a day as well. (Select your state from the list at State Wage and Hour Laws to find out more.)
  • Unpaid work time. You are entitled to be paid for all of your work time, whether or not you were “clocked in.” If you had to work during your lunch or other break, you are entitled to be paid for that time. You are also entitled to be paid for certain travel time, time spent in classes or required training, some on-call time, and more. (Check out Calculating Work Hours for more information.)
  • Meal and rest breaks. Federal law doesn’t require employers to provide any meal or rest breaks. However, if employers choose to offer such breaks, they must pay employees for breaks of 20 minutes or less. Some states also require employers to provide paid meal or rest breaks.
  • Vacation and sick days. Currently, a few states (and some local governments) require employers to provide paid sick days. And, many states require employers to pay out accrued vacation in an employee’s final paycheck. If you did not receive these amounts, you may have a claim against your employer. (For more information, see Your Right to Time Off Work.)

In addition to unpaid wages, you may be entitled to penalties based on your employer’s failure to pay your wages on time. And, you can ask the court to award you attorneys’ fees, if you file a lawsuit against your employer and succeed. (For more information on these damages, see How Much Can You Win in a Wage or Overtime Case?) You are also eligible for a host of other benefits available to employees, including unemployment benefits and workers’ compensation benefits.

What to Do If You Were Misclassified

Misclassification of workers as independent contractors is a hot employment topic these days. Stopping employers who engage in this unfair practice is a top enforcement priority of the Department of Labor. If you have strong claims against your employer, you should have no trouble finding a lawyer willing to take your case.

If you believe you should have been classified as an employee, consult with an employment lawyer right away. An experienced lawyer can determine whether you were misclassified and, if so, how much your wage claims are worth. A lawyer can also help you decide how to proceed, whether by demanding payment from your employer, filing a wage claim with a governmental agency, or heading straight to court to file a lawsuit.

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