Misclassifying Independent Contractors as Employees: Risks and Liabilities

The Fair Labor Standard Act (FLSA) has changed very little since it was enacted in 1938. The workplace, however, has changed dramatically over the past 70 years—and the plaintiffs' bar has seized upon this old law to generate a record number of FLSA-related lawsuits recently.

Most employers and human resource professionals have come to know and understand basic requirements under the FLSA and to make good-faith efforts to comply with those requirements. Despite such efforts, this complex and challenging statute can still lead employers to find themselves the subject of a Department of Labor audit or, worse, named as a defendant in a collective action lawsuit.

Many collective action lawsuits have involved challenges under the FLSA in which employees allege their employers improperly classified them as exempt to avoid paying overtime wages and certain other benefits. While these types of lawsuits have been prevalent in virtually every industry over the last