All Dallas business owners must be familiar with employment law Dallas TX, including the federal Fair Labor Standards Act (FLSA), which regulates minimum wage, overtime pay, hours worked, employer recordkeeping, and the use of child labor in every state. Employers must abide by the FLSA or they can face stiff monetary penalties and even incarceration. However, employers should be aware that the FLSA only applies to non-exempt employees – it does not apply to independent contractors. Therefore, businesses who hire independent contractors must make sure that they carefully delineate the difference.
Employment Law Dallas TX: What is an Independent Contractor?
The FLSA does not give a strict definition of what constitutes an “independent contractor” for purposes of the Act; it simply states that an “employee” is an “individual employed by an employer.” 29 U.S.C. Section 203(e). Many business owners believe that simply issuing someone a 1099 form instead of a W-2 form so that person pays his own employment taxes makes that person an independent contractor, but there are other factors a court will consider if a business is involved in an FLSA dispute. The U.S. Supreme Court has stated that the “economic reality” of the situation is controlling, and the following may be considered in deciding whether a worker is an independent contractor:
- How much are the worker’s services an integral part of the business?
- How permanent is the working relationship?
- How much has the worker invested in facilities and equipment? Does he or she use their own tools? Are they reimbursed?
- How much control does the employer have over the worker? Does the employer decide on the hours and pay, or does the worker?
- What are the worker’s opportunities for profit and loss?
- What is the level of skill required for the job?
The U.S. Department of Labor is cracking down on businesses that mislabel employees as independent contractors to avoid having to comply with the FLSA. Any business owner who hires independent contractors should make sure that the roles are clear, that the worker is aware of his status as an independent, and that policies are in place that define the contractor relationship.
Employment Lawyers Dallas TX Can Help Business Owners Protect Themselves
Employment law Dallas TX favors the employee. Any business owner seeking to protect their rights should contact experienced legal counsel. The FLSA can be a sticky trap for business owners, and the price of a violation can be high enough to sink a small business and ruin the owner’s life. Employers should contact Simon | Paschal PLLC at (972) 893-9340 right away to discuss how to avoid running afoul of the Department of Labor and protecting their business interests.
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