Employee or Independent Contractor?

Another serious major issue emerging in several wage and hour class actions is whether employees have been misclassified as an independent contractor as opposed to an actual employee. While many employers will attempt to classify employees as independent contractors for tax liability purposes, these misclassifications also have many implications in the employee’s entitlement to overtime wages and many other protections under the FLSA or other relevent state labor codes.

In determining an employee’s status as an independent contractor, there are many important questions to consider. Most of these questions relate to how much control the employer has over the employee (or indendent contractor).

Who is buying the materials?

Who invested in the equipment?

Are the services different from that of the employer?

Does the service require a special skill?

Are the services performed under the supervision of the employer?

Does the (supposed) independent contractor have employees?

Do they have other clients?

How is payment being made?

There are many other quetions and factors which the court considers in trying to determine an employee’s status. However, many employers can find unusual tricks that will make the analysis more complicated for courts. For example, in Hilton v. Apple, the class actions lawyers at Blumenthal, Nordrehaug, and Bhowmik alleged that Apple engaged their employees in Yellow Dog contracts in order to classify them as independent contractors and avoid paying them normal and overtime wages. A yellow dog contract is when the emplyees agree not to be part of a labor union.

It would be wise to contact a California labor attorney if you are unsure as to whether you are an employee or an independent contractor. First start with considering some of the questions addressed above and then consult with an employment lawyer for further clarification. Most employment attorneys — especially ones handle claims dealing with overtime claims — will offer free consultations for these types of cases. Contact one and claim lost overtime wages before the statute of limitations bars you from recovering in the near future.

The Trouble with Unpaid Internships

There are strict limitations and guidelines to unpaid internships. Even though unpaid interns are usually college students working for class credit, they are often non-exempt from state and federal wage and hour laws. Therefore, an intern is entitled to payment for all hours worked if their employer does not meet the requirements of unpaid internships.

State and federal laws usually require employers to pay interns at least minimum wage. According to the Los Angeles Daily Journal: “For an employer to be exempt from this requirement, it must devise an educational training program, which can consume time and resources with few benefits to the company.” Not surprisingly, it is very common for employers to disregard this requirement, especially in these financially difficult times. Since there are a lot of people willing to work for free to gain experience, many employers feel unobliged to strictly follow wage and hour laws.

In a recent case, Fox Searchlight Pictures was accused of violating wage and hour laws by failing to provide their unpaid interns with an educational experience. Allegedly, the “Black Swan” interns did not receive educational training that would have contributed to their career goals; they simply completed tasks that normally would have been completed by paid employees. The two interns who initiated this case are trying to get class certification; therefore, they want to start a class action lawsuit against Fox Searchlight Pictures.

Ultimately, unpaid internships should primarily be to the benefit of the intern, not the employer. If an intern is taking the place of a regularly paid employee, then they are entitled to at least minimum wage. Thus, if an employer hires an unpaid intern instead of a regular worker to save money, they are in direct violation of wage and hour laws. Above all, unpaid internships are supposed to be learning experiences that provide career preparation. An unpaid intern’s job duties should not be adapted to fundamentally assist in a company’s operations. It should be adapted to provide a beneficial educational experience.

In general, California wage and hour laws regarding unpaid internships are in accordance with the criteria listed on a U.S. Department of Labor fact sheet. According to an article on hr.blr.com: “In 2010, the California Division of Labor Standards Enforcement (DLSE) noted in an opinion letter that it has historically followed federal interpretations that recognize the special status of interns who perform some work as part of an educational or vocational program.” In addition to the six standards listed on the Labor Department’s fact sheet, the DLSE added five more criteria to create an “11-factor test.”