Employment Law

How to Know if You’re a Victim of Employer Misclassification & Entitled to Overtime Wages

By June 29, 2023 February 6th, 2024 No Comments

Companies are in business to make profits for owners, investors, and shareholders. One way that companies try to increase profits is by “employer misclassification,” meaning misclassifying whether an employee is entitled to protections under the Fair Labor Standards Act (FLSA), including entitlement to overtime wages and minimum wages. An employee can be misclassified as exempt or as an independent contractor. 

Exempt vs. Non-Exempt

Employers can save a sizable sum of money on payroll by designating workers as “exempt” and avoiding having to pay overtime. Unfortunately, many companies do this to avoid paying overtime wages by misclassifying their workers and illegally profiting from their labor. 

Exempt employees are usually paid a salary and do jobs such as outside sales, farm workers, teachers, managers, professionals, administrators, and other positions in which the employee manages the work of others, interprets company policy or has authority over their work.   

 Non-exempt employees are typically paid a day rate or by the hour and are non-professionals who are supervised by another employee and perform  duties like the following:

  • Manual labor
  • Producing products
  • Operating machinery
  • Oilfield work like inspections, pumpers, gaugers
  • Maintenance
  • Making deliveries
  • Driving vehicles
  • Running a cash register
  • Construction
  • Lawn care and maintenance
  • Caregiving
  • Warehouse 

Day Rate

Often, companies will give an employee a title such as “assistant manager,” pay them a “salary or “day rate,” and classify that employee as exempt to avoid paying overtime wages for all hours worked over forty (40) in a workweek. Suppose the employee has no real managerial authority and performs activities like those named above. In that situation, it may be a case of employer misclassification, and that employee may be owed unpaid overtime wages.

Some employers even attempt to pay all employees a “salary” or “day rate” and classify them as exempt, regardless of their job duties. It is important to remember – Being paid a salary or day rate does not make an employee exempt!  

You may be entitled to overtime even though you are paid a salary or day rate. An employer must pay a worker overtime if the wages are not an actual salary or the worker does not have the requisite job duties for an exemption.  

A salary is a predetermined amount of wages that cannot be reduced because of variations in the quality or quantity of the employee’s work. So, except for a few instances, an employer cannot reduce a salaried employee’s pay during a week. Otherwise, the employee is not truly salaried and would be entitled to overtime wages.  

If you think your employer may exploit you by misclassifying you as exempt, a Bohrer Brady labor & employment lawyer can help you explore your rights and options.

Independent Contractor Misclassification: Employee vs. Not an Employee

Under the Fair Labor Standards Act (FLSA), employees who are incorrectly classified as independent contractors are entitled to overtime compensation. The question is whether you are truly an “independent contractor” or an employee mislabeled as an “independent contractor” and entitled to overtime and minimum wages under the Fair Labor Standards Act (FLSA). 

An independent contractor is a person engaged in their own business. An employee “follows the usual path of an employee” and depends on the company they serve. 

The Economic Reality Test

Determining whether someone is an employee or an independent contractor is complex. Every independent contractor situation requires an in-depth factual analysis. 

If a business exercises sufficient control over the worker, then the worker is generally an employee and must be paid overtime and minimum wages. The “Economic Reality Test” gives some guidance on whether a person is an employee or an independent contractor:

  • If and how much of your work is a major part of the employer’s business?
    • Do you play an integral role in the business? Do you perform the primary type of work that the employer performs?
  • How long and how permanent is the relationship between you and your employer?
    • How long have you worked for the same company?
  • What is your investment in the facilities and equipment of the business?
    • Are you reimbursed for expenses, tools, supplies, etc? Do you use your own tools or equipment?
  • How much control do you have over your hours and work?
    • Who decides the schedule? Who is responsible for quality control? Do you work for any other company? Do you have a separate business site?
  • What opportunities exist to benefit from profits or take on a loss?
    • Do you purchase your own insurance or bonding? Can you earn a performance bonus?
  • How much skill do you need to perform the job?
    • Does the position require little or no training, or is the position highly skilled?


Contact Bohrer Brady, LLC About Your Employer Misclassification Case

The independent contractor lawyers at Bohrer Brady, LLC can help you assess whether you have been misclassified and thus are entitled to unpaid overtime wages. Call Bohrer Brady, LLC at (800) 876-3911 for a free, confidential consultation. We will listen to your concerns, provide honest and informed feedback, and help you determine whether or not you have an employer misclassification case.