Independent Contractor Overtime: What You Should Know

Having represented hundreds of workers in overtime pay disputes over the past seven years, I know that there is a lot of confusion among workers when they are classified as independent contractors and denied overtime pay.  Usually such workers are paid a day rate, salary or a flat hourly rate.  These workers often have questions about whether they truly are independent contractors or are instead employees.

Do independent contractors get overtime in Texas?

The short answer is no – the Fair Labor Standards Act, or FLSA, which is the federal law that governs overtime, only protects employees.  The real answer, however, is more complicated – just because a worker is called an independent contractor does not mean they truly are one in the eyes of the law.  If a worker has been misclassified as an independent contractor and is truly an employee, the worker will be owed overtime as long as he or she does not fall within one of the narrow exemptions of the FLSA (and manual laborers almost always fall outside of these exemptions, and thus workers that use their hands who are misclassified as independent contractors are almost always owed overtime pay).  So, the next question we should answer is how you can tell whether a worker is an independent contractor or an employee.   

Is there an independent contractor law in Texas?

There is no law in Texas that governs whether a worker is an independent contractor or an employee (at least for the purposes of overtime pay).  Instead, Texas agencies and courts use tests that focus on various factors to assess this issue.  

What are the independent contractor factors?

The independent contractor vs. employee issue can seem confusing, but it is usually clear based on the economic realities of the relationship between the worker and the company as to whether the worker is truly an  employee or not.  Federal courts in Texas use five non-exhaustive factors (which we can call the Texas independent contractor test) to guide this assessment:

  1. the degree of control exercised by the alleged employer;
  2. the extent of the relative investments of the worker and the alleged employer;
  3. the degree to which the worker’s opportunity for profit or loss is determined by the alleged employer;
  4. the skill and initiative required in performing the job; and
  5. the permanency of the relationship.” Hopkins v. Cornerstone Am., 545 F.3d 338, 343 (5th Cir. 2008). 

“[E]ach factor is a tool used to gauge the economic dependence of the alleged employee,” and “no single factor is determinative.” Id.  While this test can be confusing, the key issue is control – if you are told where to go, what to do, when to do it and how much you will be paid to do it, you are almost certainly going to be found to be an employee rather than an independent contractor.  Put another way, workers that have little control over their schedule or pay and who do not freelance for other companies are almost always found to be employees rather than independent contractors.  

How many hours can an independent contractor work?

This goes hand-in-hand with the issues discussed above – someone who is truly an independent contractor can work as many hours as he or she wants without receiving overtime pay.  But a worker who is really an employee and does not fall within one of the narrow FLSA exemptions must be paid one-and-a-half times their regular rate of pay (i.e. overtime).  If you are or have been classified as an independent contractor in the past three years and have questions as to whether you truly were an independent contractor, you should consult with an experienced overtime pay attorney as soon as possible.   

Can independent contractors get unemployment in Texas?  

The Texas Unemployment Compensation Act does not directly define “independent contractor”. Instead, it sets forth a broadly inclusive test, known as the “direction or control” or “common law” test, for who is an employee: “’employment’ means a service, including service in interstate commerce, performed by an individual for wages or under an express or implied contract of hire, unless it is shown to the satisfaction of the Commission that the individual’s performance of the service has been and will continue to be free from control or direction under the contract and in fact.” By implication, an “independent contractor” would be a person whose services do not meet the above test.  While Josh Borsellino does not handle unemployment cases, if you were classified as an independent contractor and have questions as to whether you might qualify for unemployment in Texas, call Josh Borsellino at one of the numbers below and he will help you with that assessment at no cost to you.  

Can independent contractors sue their employer?

The short answer here is yes.  Whether a worker would be suing for unpaid overtime or personal injuries, such suits are allowed in Texas.  Josh Borsellino regularly handles both such cases, and has recovered unpaid overtime for more than 100 workers that were misclassified as independent contractors.  If you are or were classified as an independent contractor and suffered injuries on the job or if you were denied overtime pay, call Josh now for a free evaluation of your claim.  Josh handles cases on a contingency fee basis, meaning he not paid unless you recover money.  Josh can be reached at 817.908.9861 or 432.242.7118 or complete this online form for a free consultation or email him by clicking this link.  

Share This Post