Independent Contractor Misclassification and Unpaid Wages
Just being called an independent contractor does not make it true. Federal law has a specific test for who qualifies as a contractor. Many workers who carry that label do not actually qualify as one and that matters, because employees are entitled to overtime pay and wage protections that contractors are not.
Not sure if you were misclassified? If your employer sets your schedule, controls how you do your work, provides your equipment, and prevents you from taking on other clients, you may be an employee in the eyes of the law. An employee misclassification attorney at our firm can evaluate your situation at no cost.
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What Makes Someone an Independent Contractor Under the Law?
Here is something most people never think to question. You signed a contract that says "independent contractor." Your 1099 arrives every January. Your employer calls you a vendor. It all sounds official.
But none of that decides your legal status. Federal law does.
The Fair Labor Standards Act does not care what your contract says. It looks at how the working relationship actually functions. A worker who is controlled, directed, and economically dependent on a single company is an employee under federal law regardless of what the paperwork calls them. Employees are entitled to overtime pay, minimum wage protections, and other rights that contractors are not.
This distinction matters a great deal. Companies that misclassify employees as contractors avoid paying overtime, skip employer payroll taxes, and opt out of providing benefits. The savings for the employer come directly at the expense of the worker.
The Economic Reality Test
Federal law uses what is called the Economic Reality Test to determine whether a worker is truly an independent contractor or an employee. No single factor decides the outcome. The law looks at the full picture of the working relationship.
The questions the law asks are practical ones. Think through each of them as they apply to your own situation.
Does the company control how you do your work? A true independent contractor decides how to get the job done. They set their own methods and process. When a company dictates not just the result but the way you work: the tools you use, the steps you follow, the hours you keep. If they control all of it, you are likely an employee.
Do you work for multiple clients, or mainly one company? Independent contractors typically run their own businesses. They take on multiple clients and move between projects. A worker who relies almost entirely on one company for income or is not allowed to take other jobs, is economically dependent on that company. That dependency is a strong indicator of an employment relationship.
Is the work you do central to what the company does? A true contractor provides a service that is separate from the company's core business. A plumber hired to fix a pipe at a law firm is a contractor. A paralegal who works full-time under attorney supervision doing legal work is not. When your work is essential to what the company does every day, the law tends to view you as part of that business.
Do you have a real opportunity to profit or lose based on your own decisions? Independent contractors run a business. They set their rates, manage their costs, and take financial risk. Workers who are paid a set amount per hour or per job, with no ability to grow their earnings through their own business choices, look more like employees than entrepreneurs. Or, if your pay is tied directly to whether the company profits or not.
Is the relationship permanent or project-based? Contractors are typically hired for a specific project or period of time. An ongoing, open-ended work relationship that continues indefinitely resembles employment, not an independent business arrangement.
Read those questions again and think about your actual day-to-day situation. Not what your contract says. Not your job title. What your work actually looks like. If most of those answers point toward the company rather than your own independence, your classification may not hold up under federal law.
How The 2024 DOL Rule Changed Things
In January 2024, the Department of Labor issued a new rule that significantly changed how independent contractor status is evaluated under the FLSA. The rule restored a broader, multi-factor analysis that makes it harder for companies to defend contractor classifications that don't reflect genuine independence.
Under the new standard, no single factor is automatically decisive. The analysis requires looking at the full economic reality of the relationship. This was a meaningful shift from prior guidance that some companies had used to justify contractor labels for workers who functioned as employees in practice.
For workers who have been classified as contractors for years, this rule may be directly relevant to whether their classification was ever accurate. Claims within the applicable statute of limitations may still be available.
What Misclassification Actually Costs You
Most misclassified workers do not realize the full scope of what they have lost. Overtime is the most visible piece, but it is not the only one.
Overtime Pay: Employees who work more than 40 hours in a workweek are entitled to time-and-a-half. Contractors are not. A worker who puts in 50 or 55 hours a week and receives a flat rate for all of it may be owed a significant amount in unpaid overtime potentially going back two to three years.
Minimum Wage Protections: Federal and state minimum wage laws apply to employees, not contractors. Some contractors are paid piece-rate or per-project amounts that, when divided by actual hours worked, fall below the minimum wage. That shortfall may be recoverable.
Meal and Rest Break Pay: Many states require paid rest breaks and uninterrupted meal periods for employees. Contractors are generally not covered by those requirements. A misclassified worker may have been denied years of break pay they were legally entitled to receive.
Benefits and Other Protections: Beyond wages, employees are entitled to workers' compensation coverage, unemployment insurance, and protection under anti-discrimination laws. Contractors receive none of these. The financial value of what misclassified workers lose can extend well beyond the paycheck.
Why Clients Trust Us
Our Values
Types of Unpaid Wage Claims We Handle
We handle the full spectrum of wage and hour violations under federal and state law, with particular expertise in:
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Employee Misclassification
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Expense Reimbursement
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Untimely Wage Payment
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Meal and Rest Break Violations
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Employer Tip Theft
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Minimum Wage Violations
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Off-the-clock Work
Common Industries Where Misclassification Occurs
Misclassification is concentrated in industries where companies rely on large workforces and look for ways to reduce labor costs. Josephson Dunlap handles these cases across many industries, including trucking and transportation, construction and trades, healthcare and home health services, technology and software development, gig and delivery platforms, oil and gas, janitorial and facilities services, and staffing and temp work.
Workers in these fields are among those most frequently labeled as contractors when their actual working conditions reflect employment. They are also among the least likely to receive accurate information from their employers about what the law requires.
MICHAEL JOSEPHSON
ANDREW DUNLAP
RICHARD SCHREIBER
OLIVIA BEALE
ALYSSA WHITE
JULIA CLINE
SCOTT STOTTLEMYRE
Unpaid overtime Lawyers Fighting for Workers Nationwide
With more than two decades of experience, our unpaid wage attorneys have helped workers throughout the U.S. stand up to employers who would seek to cheat them out of fair wages.
Josephson Dunlap handles unpaid wage and overtime cases for workers across every pay structure, including:
We handle claims involving a wide range of violations, including:
- Employee Misclassification
- Meal & Rest Break Violations
- Delayed or Untimely Wages
- Off-the-Clock Work
Josephson Dunlap handles these cases exclusively. That focus means we know this area of law in detail and have the staff and resources to pursue claims of any size. Whether its an individual worker or a nationwide class action, we have the expertise to recover what is rightfully owed. We have helped more than 100,000 workers recover wages across all 50 states.
What Our Clients Are Saying
My experience with Josephson Dunlap was great. The team took on my lost wage case and not only represented me but also advocated for me {...} I highly and strongly recommend this firm thanks again to the team.
They were great and very easy to work with. Accommodated with my work schedule even when my schedule changed, no problem. They made the process so easy and we came out with a great outcome!
I emailed in with a question and received an immediate response from a supervisor.... On a Saturday! Yvonne was so courteous and helpful and followed up on my issue after the weekend. I truly appreciated the customer service that was provided!
The entire staff has been great handling the case from start to finish. They have kept me notified of changes and announcements along the way. Would recommend using them if you find yourself needing legal guidance
I'd like to give my appreciation and gratitude to Josephson Dunlap Law Firm. {...} Thank you for all that your law firm does for the labors of America. I would have never known about my unpaid time if it wasn't for Josephson Dunlap Law Firm and Samantha Avila.
Frequently Asked Questions About Unpaid Overtime
Any hour worked past 40 in a single workweek must be paid at one and a half times your regular rate. The workweek is a fixed seven-day period set by your employer. Hours do not carry over between workweeks and the workweek cannot change from to week to week in order to avoid paying workers overtime.
No. Federal law requires time-and-a-half for hours past 40. Paying a flat rate for all hours, including overtime hours, is a violation. The difference between what you received and what you should have received may be recoverable.
No. Federal law prohibits employers from retaliating against workers who file wage claims or participate in related proceedings. If an employer retaliates, by cutting hours, changing your schedule, or terminating your employment, that is a separate violation with its own consequences.
Waivers of FLSA rights are generally not enforceable. You cannot legally sign away your right to overtime pay. Arbitration agreements may affect how a claim is filed, but they do not eliminate your right to recover unpaid wages. An attorney can review your specific agreement and explain your options.
The review is free. Josephson Dunlap doesn't ask anyone to pay out of pocket to find out if they could be owed for their overtime. Anything you discuss with our legal team is confidential, and there's no obligation to do anything.
It may. Certain bonuses must be factored into your regular rate before overtime is calculated. If your employer paid you a bonus during a week when you worked overtime but did not adjust your overtime rate, your overtime may have been underpaid for that period.
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