WASHINGTON D.C. — The U.S. Department of Labor, after conducting an investigation, found that Agape Cottages, which operated residential care facilities in Orange County, CA, violated the Fair Labor Standards Act (FLSA). The Wage and Hour Division of the agency negotiated an agreement in which the company will pay nearly $200,000 in back wages to resolve claims that it failed to properly pay minimum wage and overtime. The settlement will pay seventeen workers more than $150,000 for overtime violations and more than $45,000 in back wages for minimum wage violations.
Misclassification as Independent Contractors
The Department of Labor found that Agape Cottages classified more than a dozen live-in employees as independent contractors (“care partners”) instead of employees at six of its facilities in California. However, during its investigation, it found that these workers were economically dependent on the company and that they were, in fact, employees.
According to the Department of Labor, the “economic realities” test should be used to determine whether an individual is an employee or an independent contractor under FLSA. This test is used to determine whether an individual is economically dependent on the putative employer (and thus an employee) or is really in the business for him or herself (and thus is an independent contractor). A worker who is economically dependent on an employer is suffered or permitted to work by the employer, which provides a broader scope of employment.
Who is an “Employee” Under FLSA?
Guidance from the Department of Labor states that most workers should be considered employees under the FLSA’s expansive definitions. The broad definition of employment under the FLSA is “to suffer or permit to work” and FLSA’s intended expansive coverage for workers must be considered when applying the economic realities test to determine whether a worker is an employee or an independent contract. The test should not be analyzed mechanically or in a vacuum and no single factor should be over-emphasized. The test should be used to ultimately answer the question of economic dependence.
Employee misclassification remains a substantial issue that leaves many workers without the valuable protections of FLSA and other labor laws. You should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page if you feel your employee wage rights have been violated because you have been misclassified as an independent contractor. Our top-rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today