Nashville Bar Association
Tennessee Bar Association
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Vanderbilt Law School

Wage Theft

The Fair Labor Standards Act requires employers to pay most employees overtime for all hours worked over 40. But some employers intentionally misclassify workers as “exempt” or as independent contractors in an attempt to avoid paying overtime.

Employee vs. Independent Contractor

Employees are often misclassified as independent contractors so the company can avoid overtime pay and other employee-related obligations such as worker’s compensation insurance premiums. The U.S. Court of Appeals for the Sixth Circuit has identified at least six factors in determining whether an individual is an employee or an independent contractor:

  1. the permanency of the relationship between the parties;
  2. the degree of skill required for the rendering of the services;
  3. the worker's investment in equipment or materials for the task;
  4. the worker's opportunity for profit or loss, depending upon his skill;
  5. the degree of the alleged employer's right to control the manner in which the work is performed; and
  6. whether the service rendered is an integral part of the alleged employer's business.

Keller v. Miri Microsystems LLC, 781 F.3d 799, 807 (6th Cir. 2015). Other factors to be considered are whether the defendant had authority to hire or fire the plaintiff and whether the defendant maintained plaintiff’s employment records. Id. No one factor is determinative, the central question is the worker’s economic dependence upon the business he or she is working for. Id.

In looking at the first factor, independent contractors generally have variable or impermanent working relationships with the principal company because they "often have fixed employment periods and transfer from place to place as particular work is offered to them, whereas 'employees' usually work for only one employer and such relationship is continuous and indefinite in duration. "Baker v. Flint Eng'g & Constr. Co., 137 F.3d 1436, 1442 (10th Cir. 1998).

In looking at the degree of skill required, courts will look to see whether the plaintiff’s profits increased because of initiative, judgment, or foresight of the typical independent contractor, or whether the work was more like piecework. Keller, 781 F.3d at 809.

Regarding any capital investment, the Sixth Circuit has found significance in whether the plaintiff performed a specialized service requiring a tool or application he or she has mastered or whether the plaintiff used tools of the company to accomplish the task.

Common FLSA Exemptions

Several key exemptions to the overtime law exist. Many “white collar” workers fall under the executive, administrative, or professional exemption. Whether or not you fall into one of these or another exempt category is highly fact specific.

  1. Executive Exemption

    To qualify for the executive employee exemption, all of the following tests must be met:

    • The employee must be compensated on a salary basis at a rate not less than $684 per week;
    • The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
    • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
    • The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
  2. Administrative Exemption

    To qualify for the administrative employee exemption, all of the following tests must be met:

    • The employee must be compensated on a salary or fee basis at a rate not less than $684 per week;
    • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
    • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
  3. Professional Exemptions

    To qualify for the learned professional employee exemption, all of the following tests must be met:

    • You must be compensated on a salary or fee basis at a rate not less than $684 per week;
    • Your primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
    • The advanced knowledge must be in a field of science or learning; and
    • The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

    To qualify for the creative professional employee exemption, all of the following tests must be met:

    • The employee must be compensated on a salary or fee basis at a rate not less than $684 per week;
    • The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

    Several other exemptions and exclusions exist, such as the outside sales exemption and the highly compensated employees exemption. Also, many farm workers are excluded from the FLSA’s protections.

If you have questions about whether you are being unlawfully denied overtime pay, contact an employment lawyer serving Nashville at 615-823-1737 or curt@maskerfirm.com for a free and confidential legal consultation.

Client Reviews
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Curt really came through for me when a previous employer had reported my job title and hire dates incorrectly, he got it corrected within 12 hours of speaking to him about it! I would recommend him for any of your legal needs as he is quite efficient! Renee
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Curt was very responsive from the beginning. He made it a very easy process, and he provided excellent guidance in the review of my severance agreement. Due, in part, to Curt's thoughtful suggestions in regards to changing some key language in the agreement that would protect both me and my former employer, they agreed to the changes. To protect yourself during job transition, a review of a severance agreement is a smart thing to do, and Curt will do an excellent job on your behalf. Thomas
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