Across the country, more employers are hiring individuals on an as-needed basis. This often leads to denying workers benefits such as health insurance, overtime, and sick pay, among others. Hiring employees on an as-needed basis may be a violation of the Fair Labor Standards Act (FLSA). The Department of Labor has set forth a legal test to determine whether or not a worker is considered an employee or a contractor.
All companies must now be familiar with the Labor Department’s new rules defining independent contractor versus employee status for several reasons. In addition to working for principals as an independent worker, many rep firms hire employees to assist in their businesses. When are workers employees? When are they contractors? These are differences in definitions that have huge legal implications.
A September 1, 2014 report by the New York Times, revealed an increase in lawsuits across the nation, charging various employers of violating minimum wage and overtime laws. Some of the allegations include erasing work hours and wrongfully taking employees’ tips.
Both federal and state officials argue that more companies are violating wage laws than ever before. Officials speculate that these violations are motivated by competition and higher profits. However, another argument supposes that the structure of these businesses essentially incentivizes wage theft due to their organizational structure.
Gov. Andrew Cuomo signed an act earlier this year that will have a significant impact on employers in the transportation industry by changing the tests used to determine whether a worker is an employee or an independent contractor. The act, titled the “New York State Commercial Goods Transportation Industry Fair Play Act,” takes effect on March 11 and amends the New York Labor Law.