Wage & Hour Issues in the Gig Economy: When is an “Independent Contractor” really an employee?

Sara Geenen

Over the last several years, Uber and Lyft have become a regular part of most people’s lives. We know that the drivers can set their own hours and that they use their own cars, but what most people don’t realize is that these drivers are considered “independent contractors.” Because the drivers are not “employees,” they don’t receive minimum wage or overtime protections, nor are they eligible for unemployment compensation if Uber or Lyft decide that the driver’s services are no longer needed. When a worker is classified as an independent contractor, he or she is considered “in business” for himself, but that might not actually be the case. As drivers have been taken advantage of, lawsuits have been filed across the country challenging the drivers’ classification as independent contractors, and therefore, the fact that the drivers received less than minimum wage or were not paid overtime. Even the NLRB has taken an interest in the misclassification of workers.

Uber and Lyft, though, aren’t the only kinds of work where the independent contractor classification is misapplied, and therefore illegally deprives an employee of wages and overtime and other benefits that go along with direct employment – and as a result, the worker must pay additional income, social security, and Medicare taxes ordinarily paid by an employer. Some nurses and home care aides, people who provide cleaning or delivery services, and many other workers may be considered independent contractors by the company they work for, but they may actually be employees entitled to basic wage and hour protections.

If a person’s work is so controlled by the company that sends them out to perform work, the worker should be receiving at least minimum wages and overtime for all hours worked in excess of 40 under the Fair Labor Standards Act. In addition, under Wisconsin’s wage and hour law, if a worker is really an employee, he or she is entitled to pay for all hours worked – this means time spent driving between clients’ residences or work sites during the work day, short periods of time of less than 30 minutes in between clients’ homes or work sites, or time spent waiting for a client to finish a doctor’s or other appointment.

You may be an employee – and therefore entitled to pay for all of the time spent working or waiting for work at the direction of the employer – if the “employer” controls where, when, and how you do your work. Rules about what to where, how to drive, when to show arrive, and what to say, or specifications about how to perform work, suggest employee status, especially if the employer sets or controls the amount of work available to the worker. For instance, a home care aide who performs home care for several clients during her work day at the direction of a company and in accordance with the company’s rules, is probably an employee who should receive overtime for all hours worked in excess of 40 under the FLSA and should receive pay for time spent driving between clients, and may be entitled to reimbursement for some of the travel expenses (i.e. mileage).

An employer cannot require that you waive your right to be an “employee” or to the minimum protections of the FLSA or wage and hour law.

If you have questions about your status as an employee or independent contractor, contact The Previant Law Firm for a free consultation today at (414) 240-1185.