Miami-based Aventura Limousine has been sued (again) for unpaid overtime. The company has been sued several tmes over the last few years for similar overtime violations. The cases highlight two very basic issues that have harmed employees and have tricked up otherwise law-abiding employers.
First, according to the pleadings, Aventura Limousine was not hiring drivers, it was contracting with independent contractors. Employees are subject to the Fair Labor Standards Act's minimum wage and overtime provisions. Independent contractors are not employees, and thus the FLSA does not apply to them in any way. But this begs the threshold and dispositive question of who qualifies as an independent contractor?
The answer is deceptively complex. There is no clear, bright-line rule and the courts consider the issue on a case-by-case basis. This is of little help to employers. Unless the company can confidently demonstrate that it truly hired independent contractors and that it did not actually control them, most employers would be wise to settle up early and cheaply. Most of the time the employer loses this issue.
Employers need to retain an experienced employment attorney or an accounting firm to conduct an audit of what personnel are employees versus independent contractors. Aside from facing potentially enourmous civil liability by aggrieved employees, employers who misclassify their personnel face fines by the Internal Revenue Service. The government loses billions of dollars annually in unpaid payroll and income taxes.
Second, the case highlights the complexity of the motor carrier exemption. As a general rule, drivers, drivers' helpers, loaders and mechanics are exempt from the overtime provisions. But the exempt employees still need to be engaged in interstate commerce, and scholars have argued over what constitutes interstate commerice since the founding of the republic.
Sarelson Law Firm has extensive experience litigation FLSA matters on behalf of both employees and employers, and has also advised employers on FLSA compliance matters.
