One of the many advantages of hiring independent contractors instead of employees is that contractors are not protected by most federal and state labor laws.

This includes the federal Fair Labor Standards Act (FLSA), which establishes a national minimum wage and overtime standards for covered employees.

But in a concerted effort to require more businesses to pay overtime to workers, the U.S. Department of Labor (DOL) has acted to make it harder to classify workers as independent contractors for labor law purposes.

As a result, hiring firms could end up having to pay time-and-a-half to workers they previously thought were exempt from the requirement.

The FLSA

If you hire workers to help in your business, you are likely subject to the FLSA, which establishes a national minimum wage and overtime standards for covered employees.1 The FLSA applies to all businesses

with $500,000 or more in annual sales, or

that are engaged in interstate commerce.

This covers nearly all workplaces, because the courts have broadly interpreted what constitutes interstate commerce.2

The FLSA requires employers to pay all non-exempt employees one and one-half times their regular rate of pay for all hours of work over 40 hours in a week.

If an ... Log in to view full article.