Signed agreements from workers stating that they are independent contractors mean little if the Department of Labor (DOL) feels a worker has been improperly classified.
When facing charges of misclassification, employers often use those agreements as their primary defense.
But as employment law attorney Keith Reinfeld pointed out in an interesting blog post, those agreements don’t always carry the day in court.
Editor says he was misclassified
In his post, Reinheld breaks down a lawsuit in which a former film editor for the “Girls Gone Wild” series claims he was improperly classified as an independent contractor by the film company and falsely denied overtime pay.
The editor, Philip Anagnos, claims he worked long hours choosing footage for the “Girls Gone Wild” films and was paid a flat rate of $170 per day. He also claims he did not have control over how he did his work, a key factor in determining whether someone is an independent contractor.
Joe Francis, the founder of the “Girls Gone Wild” franchise, claims Anagnos has no case — because he signed an agreement and release stating that the film company had paid him all wages owed.
But as employment law attorney Keith Reinfeld points out on the wage & hour law blog of Fox Rothschild, LLP, “an employee’s right to unpaid wages or overtime can only be released by the Department of Labor.”
Backing up Reinfeld’s statement is the DOL’s track record of ruling against employers in misclassification cases that have signed independent contractor agreements.
3-point test
So how can an employer protect itself against misclassification claims? Follow the feds’ three-point test for determining a worker’s classification:
- Behavioral control. If the business has the right to control or direct not only what work needs to be done, but how it gets done, then the worker is most likely an employee.
- Financial control. If the person has a significant investment in the work being performed, he or she may likely be an independent contractor. Also, if the person can earn a profit or incur a loss, that’s an indication the person’s in business for him or herself and is an independent contractor.
- Type of relationship. The IRS will also look at how the worker and the business owner perceive the relationship. If the person receives benefits — like insurance, a pension or paid leave — that’s usually a giveaway that the person’s an employee.
Source: “‘Girls Gone Wild’ Film Editor Seeks Unpaid Overtime Pay,” by Keith Reinfeld, FoxRothschild.com, 7/8/11.
