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Misclassification could cost workers their overtime pay

Many workers in Missouri who regularly spend more than 40 hours each week performing job duties may expect to receive overtime pay, or time-and-a-half, for the extra hours. However, according to the U.S. Department of Labor, the Fair Labor Standards Act does not require employers to pay independent contractors overtime pay, and because of this, some companies intentionally misclassify workers

But how can people determine whether they are independent contractors or employees? The IRS explains that the answer may not be straightforward, as there are several factors that must be considered.

Behavioral control

An employer has the right to dictate what work an employee does, and when and how he or she does it. For example, an employee may work in a company's tech department, and may need to use a vendor contracted with the company for computer hardware and software components. The employee may have to work between 8 a.m. and 5 p.m. and may be required to provide training and instruction to employees after every update. These elements suggest that the worker is an employee and should get overtime.

On the other hand, an IT worker may be expected to perform upgrades and fulfill other technology needs during times when other employees are away. This person may choose to come in any time, as long as the work is done, and the worker is free to use the vendor that provides the best deal, adding those expenses to the final invoice he or she gives to the company when the work is complete. These factors may indicate that this worker is an independent contractor.

Financial control

Purchases and payment are also elements of a worker's classification. An employee typically uses the tools and equipment provided by the employer, and if he or she must purchase items for performing personal duties, the employer generally reimburses these. Independent contractors usually have their own tools, which they purchased on their own. When it comes to payment for services, an employee often receives an hourly wage, while the independent contractor receives a set amount.

Other factors regarding a worker's duties, equipment, payment and relationship with the employer may also apply. The IRS provides some resources that anyone may use for help in determining the status of a worker.

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