Employee vs. Independent Contractor

The FLSA's overtime and minimum wage protections apply to employees, not independent contractors. So, if an individual is considered to be an independent contractor, they are not entitled to be paid overtime compensation for hours worked over 40 in a work week. To determine whether an individual is an independent contractor courts typically apply what is referred to as the "Economic Realities Test." Under this test, the courts analyze the following factors: (1) the degree of control exercised by the alleged employer; (2) the extent of the relative investment of the worker and the alleged employer; (3) the degree to which the worker's opportunity for profit and loss is determined by the employer; (4) the skill and initiative required in performing the job; (5) the permanency of the relationship--is it temporary or is this a continued relationship?; and (6) the extent to which the workers' services are a necessary and integral part to the employer. Courts typically conclude that if two or more of the factors listed above offer evidence against the existence of an employer-employee relationship, then that individual will likely be considered an independent contractor and therefore not entitled to overtime compensation. But if the individual is found to be an employee, they are likely going to be required to be paid for their hours worked over 40 as overtime compensation.