Texas Independent Contractor Misclassification Attorney

Am I an Employee or an Independent Contractor?

How do you know whether you have been appropriately classified as an employee or independent contractor? Unfortunately, the answer is not always cut and dried. An attorney with experience in the nuances of this area of law would need to review all of the facts of your particular situation. But we provide a summary here of the relevant analysis.

Employee vs Independent Contractor

Different state and federal laws use different tests that consider various factors in order to determine whether an individual should be considered an employee or independent contractor. For purposes of federal overtime law, a true independent contractor has a certain level of autonomy such that they can fairly be considered to be in business for themselves. A company may hire them to provide a specialty service outside of the employer's realm of expertise. True independent contractors typically market their services or make themselves available to many different companies, or to the general public.

An employee, on the the other hand, depends on one or just a few employers for their livelihood. An employee might have a highly skilled job, but still work under closer supervision by the company than an independent business would.

Below are some more detailed factors that judges and juries are supposed to consider in order to determine employee vs. independent contractor status under the federal Fair Labor Standards Act.

Some factors that indicate independent contractor status under the federal Fair Labor Standards Act include: 

• The individual controls how the work is to be accomplished and works with little supervision or direction;
• The individual has made significant investments in the business;
• The individual has a significant opportunity for profit or loss depending on how they manage their business;
• The nature of the work requires a unique skill set or exercise of significant initiative within the business; and
• The individual works for many different companies and for relatively short periods at a time.

On the other hand, factors that indicate employee status under the federal Fair Labor Standards Act include:

• The individual is subject to relatively close control and supervision by the employer;
• The employer’s investments in the business are much more than the individual’s investments;
• The individual has little opportunity for profit or loss because the employer controls the schedule and pay;
• The individual works for the same company for an extended period;
• The nature of the work is routine, even if specialized, and does not allow much initiative within the business; and
• The work is an integral part of the employer’s business.

This area of law is very complex. In most cases, some factors point one direction while other factors point another direction, making it difficult to predict how a case may come out. Some states use different tests under their state overtime laws that are more likely than federal law to result in finding employee status.