ESSAY

Running head: EMPLOYEE V. INDEPENDENT CONTRACTOR UNDER FLSA 1

EMPLOYEE V. INDEPENDENT CONTRACTOR UNDER FLSA 4

Employee v. Independent Contractor

Laurelle Espinoza

Bus-340

April 11, 2021

Employee v. Independent Contractor under FLSA

Fair Labor Standard Act (FLSA)

The Fair Labor Standards Act is a United States labor law of 1938 29 U.S.C § 203. The law provides regulations on the minimum wage paid to an employee, child labor standards, record keeping, and overtime pay legibility, therefore, affecting both part-time and full-time employees within the local governments, federal state, and private sector (Moran, 2009) In addition FLSA ensures that workers are protected and covered especially if they are earning annual sales totaling to $500,000 and are involved in federal commerce (Dubal, 2018).

The FLSA dictates the minimum wage to $7.25 per hour. It also directs on the overtime which provides that covered nonexempt workers must be entitled to overtime pay if they work to exceed 40 hours per week at a rate not less than one and one-half times the normal pay rate (Dubal, 2018). However, no clear directions are provided for work done during holidays, weekends, regular days of rest, except when there is overtime on such days. Moreover, FLSA also covers the hours worked by an individual especially all the time an employee is required to be present on duty or within the premises. It also ensures that employers display proper records of work requirements as stipulated by the FLSA. Lastly, it ensures that minors are protected from working by being given a chance to engage in education and their well-being (Dubal, 2018).

There are differences between an independent contractor and an employee under the FLSA. An employee is protected by several state and federal labor and employment laws while a contractor is not protected by labor and employment laws. This means that employees enjoy more privileges compared to contractors. Secondly, a prospective employee has to complete a formal application handled by Human Resources. He or she receives a job offer after which it is accepted before he is asked to provide additional information through an interview e.g. he has to provide birthday, marital status, and citizenship status. Contrariwise, a likely contractor usually contacts the department or person that is interested in specific tasks or services completed. He or she is therefore required to complete a proposal and provide a Statement of Work with the procurement or legal subdivision of the organization.

Besides an employee has to report all money paid to him during the tax year on a W-2, whereas a contractor only reports payments exceeding $600 in a calendar year on a 1099 Form (Moran, 2009). Also, an employee provides information to the federal and state Unemployment Insurance while a contractor does not.

Lastly, an employee is paid on a salary or wage or is paid on an hourly rate while a contractor is paid for a completed job that may either be daily, the hourly, or weekly amount that ends on a particular date (Moran, 2009). Sometimes misclassification of employees occurs therefore affecting employer requirements under the FLSA. When misclassification of employees happens they are mostly denied access to crucial privileges and protections that they are eligible to by statute e.g. overtime compensation, the minimum wage, medical and family leave safe working conditions, and unemployment insurance. Therefore, these losses may result in employers being subjected to penalties for failing to adhere to state and federal laws. Employers may also end up paying more in terms of fines and other benefits when the employee is not properly classified due to failure to remit workers’ compensation funds or state unemployment insurance (Mayer et al., 2013).

Arizona Law

James's should be regarded as an independent contractor because he already had different offices such as in Phoenix, Flagstaff, Tucson, and Yuma. He was not given a specific office by the employer to work from instead he had his own offices from where he carried out his duties. Secondly, Smith entered into a contract with James as a contractor and signed for it. James was not paid a specified salary but was paid in commission for the work done which means that it was a contract they entered with clear instructions on the mode of payment and not as part of an employee on the payroll. Lastly, James was only in the office when needed and not regularly as a normal employee.

References

Dubal, V. B. (2018). Employment Law: The Employee vs. Independent Contractor Dichotomy. The Judges' Book, 2(1), 10.

Mayer, G., Collins, B., & Bradley, D. H. (2013). The Fair Labor Standards Act (FLSA): An Overview.

Moran, J. A. (2009). Independent contractor or employee-misclassification of workers and its effect on the state. Buff. Pub. Int. LJ, 28, 105.