The U.S. Department of Labor has sued a Texas company and its president for alleged violations of the overtime and recordkeeping provisions of the federal Fair Labor Standards Act (FLSA), claiming that welders working offshore were improperly classified as independent contractors.  

According to the DOL’s lawsuit, an investigation by its Wage and Hour Division found that the Texas company classified the offshore welders as independent contractors when in fact there was an employment relationship, making these workers eligible for overtime compensation under the FLSA.  The lawsuit claims that almost $2 million are owed in back wages.

Lawsuits against employers by the DOL like this one show how serious the government is about making sure that employers do not classify workers as independent contractors when they do not meet the legal tests for independent contractor status.  Employers who improperly classify workers as independent contractors, thinking it will reduce recordkeeping obligations or perhaps because the worker requests such classification, are at risk of being held liable for overtime compensation, payroll taxes and coverage under employee benefit plans.   

You may review our prior Employer Alerts discussing the legal tests for determining whether an individual is an independent contractor or an employee by clicking on the title of the article below.

Independent Contractor or Employee? Recent Court Opinions Provide Guidance

 

Overview of Legal Tests For Determining Whether a Worker Is an Employee or an Independent Contractor

 

Independent Contractor or Employee? The Difference Can Be Critical.

For questions regarding this Alert or other employment matters, or assistance with matters involving independent contractors, contact Louis Meyer at 919.783.2810 or lmeyer@poynerspruill.com,