Employers in New Jersey are legally required to classify members of their workforce as either an “exempt” employee, a “non-exempt” employee, or an independent contractor. Employee misclassification occurs when businesses attempt to avoid paying the minimum wage and overtime pay or offering employment benefits like health insurance. If you have been the victim of employee misclassification, turn to Castronovo & McKinney, LLC.
Our firm regularly collaborates with wage and hour attorneys in and around New Jersey to protect the rights of misclassified workers. Let an experienced employee misclassification attorney help you fight back. Contact our office today to arrange a free consultation.
Employee Misclassification: What Is an Exempt Employee?
Under the Fair Labor Standards Act (FLSA), there are two tests to determine whether an employee is considered exempt. The first test is the salary test. An employee who earns a weekly salary of $684 may be considered exempt. By contrast, non-exempt or hourly employees are not guaranteed that pay level and are entitled to overtime pay of one-and-a-half times their hourly rate for all hours worked over 40 per week.
There is also a duties test to determine if an employee is exempt. In short, the employee’s duties must fall under one of the following categories:
- Executives are managers with direct oversight of at least two full-time employees and the authority to hire and fire them or substantially affect their job status.
- Professionals primarily engage in work requiring substantial knowledge and training, use independent professional judgment, and have sustained formal training in the field (e.g., doctors, accountants, lawyers).
- Administrative employees engage in non-manual office work necessary for the employer’s business operations and use independent judgment on significant matters.
- Computer systems analysts, programmers, software engineers, or others involved in creating or modifying programs or systems are exempt.
Notably, these exemptions consider actual duties, not job titles, which means many salaried employees may be entitled to overtime pay. If you are a misclassified employee, you need an attorney experienced in handling employee misclassification claims.
Employee Misclassification: What Is an Independent Contractor?
Generally, independent contractors are self-employed individuals who provide goods and services to a business or another person under the terms of a contract and are free from supervision, direction, or control of the services they provide. In particular, independent contractor status may exist when a worker:
- Pays their expenses
- Sets their schedule
- Negotiates or sets their pay rates
- Carries liability insurance
- Invests in equipment and supplies
In short, independent contractor status is not determined by how the employer classifies the working relationship.
What is an employer-employee relationship?
While there is no specific definition of the employer-employee relationship under the FLSA or New Jersey labor law, that relationship depends on the employer’s degree of supervision, direction, and control over the work performed. In particular, an employer-employee relationship may exist when an employer:
- Directly supervises the work performed
- Sets the work hours
- Determines the rate of pay
- Requires attendance at meetings
- Requires training sessions
- Requests oral or written reports
- Reserves the right to review/approve any work product
- Evaluates job performance
Moreover, the Internal Revenue Service (IRS) is concerned about employee classifications due to the tax revenue implications. The IRS considers the following factors in determining whether a worker is an employee or an independent contractor:
- Behavioral control – If the employer control hows the work is done and the method of accomplishing it, the worker is likely an employee.
- Financial control – A worker may also be an employee if the employer has the right to direct or control the financial and business aspects of the worker’s performance (e.g., reimbursing expenses, providing tools and equipment).
- Type of relationship – If the employer provides benefits (e.g., health insurance, vacation pay, retirement plans) or the work is central to the business, the worker may be an employee.
When Employers Misclassify A Worker as An Independent Contractor
Employers attempt to misclassify employees as independent contractors to avoid paying wages and benefits that employers are required to provide to their employees, such as:
- The minimum wage/overtime pay
- Unemployment benefits
- Health insurance
- Workers’ compensation benefits
- Short-term disability insurance
- Social Security benefits
Ultimately, misclassifying an employee as an independent contractor violates state and federal employment laws, but it takes an experienced employment lawyer to protect your rights.
Contact Our Experienced New Jersey Employee Misclassification Attorney
At Castronovo & McKinney, we believe all employees must receive wages they are entitled to under applicable federal and state law. If you have sustained losses after being misclassified, you may be able to recover compensation through an individual or class-action lawsuit. Contact our office today to learn how we can help.