Claims arise where employees were classified as exempt without satisfying the duties test, or where workers were treated as independent contractors despite an employment relationship. Different tests govern each context.
The economic reality test governs contractor status under the FLSA.
Alternative Names:
Employee Misclassification|Worker Classification Claim
Why it Matters?
Contractor misclassification carries exposure beyond wage claims, since it implicates payroll tax, unemployment insurance, workers' compensation, and benefits eligibility across the entire classified population. That aggregate exposure frequently exceeds the wage component many times over. State tests including the ABC test are substantially stricter than the federal economic reality analysis, which means a classification valid federally may fail under state law.
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Related terms
Frequently asked questions
Why does contractor misclassification exceed wage exposure?
How do state tests differ?
