“Far too often, employers misclassify their employees as independent contractors to avoid paying them in compliance with the FLSA, as well as other federal, state and local statutes,” said Michael Young, director of the Wage and Hour Division’s Jacksonville District Office. “Misclassification costs taxpayers millions of dollars each year in uncollected employment taxes, and gives unscrupulous employers an unfair advantage. The Wage and Hour Division is vigorously pursuing corrective action in those situations when workers are, in fact, employees, to ensure that they are paid required wages and to level the playing field for employers who play by the rules.”

The division’s investigation determined that the employer paid painters on a piece-rate basis for work performed on weekends, without regard to the number of hours worked or to overtime obligations, improperly changing their status to “independent contractors” on the weekends for the same work they performed as employees Monday through Friday. As a result, employees were paid “straight-time” rates for all hours worked, including weekends, instead of time and one-half their regular rates for hours worked beyond 40 in a workweek, as required by the FLSA. Additionally, the employer failed to maintain accurate records of regular and overtime hours worked and regular and overtime pay.

In addition to paying the back wages, the company agreed not to misclassify employees as independent contractors in the future, and to keep accurate time and payroll records.

The misclassification of employees as independent contractors presents a serious problem, as these employees often are denied access to critical benefits and protections—such as family and medical leave, overtime compensation, minimum wage, and Unemployment Insurance—to which they are entitled. In addition, misclassification can create economic pressure for law-abiding business owners, who often find it difficult to compete with those who are skirting the law. Employee misclassification also generates substantial losses for state UI and workers’ compensation funds.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per workweek. Simply paying employees a salary, a piece rate or a day rate does not exempt them from overtime protections. In general, “hours worked” includes all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees’ wages, hours and other conditions of employment be maintained.