Rob Wiley: My name is Rob Wiley and I'm speaking today with Colin Walsh, Austin employment lawyer, about independent contractors versus employees. So Colin, what's the difference between an independent contractor and an employee?
Colin Walsh: Well, an independent contractor is not going to be under the control of the employer. The independent contractor can work on other projects at the same time as they are working for another employer. They can not have the same directives or control over the independent contractors an employer would have over the employee.
Rob Wiley: Yes, I mean, if I see somebody who comes in and they're working 40 hours a week or more for one employer, I just don't see how that person can really be an independent contractor. I mean, their job, their economic existence is pretty much pinned to the person whose signing their paychecks. Somebody who's working 10 hours a week for one employer, 20 hours a week for another, has their own web site marketing their own services, I think that starts to look a lot more like an independent contractor. But I also understand that this is one of the more complicated areas of employment law and that sometimes the difference between who is an independent contractor and who is an employee can depend on which law you're dealing with. Is that true?
Colin Walsh: Yes, that's definitely correct. People can be labeled as employees under one law or an independent contractor under another one. And they can be doing the same job. So, it is important to contact an employment attorney regarding whether or not you are actually an independent contractor or an employee under the particular law that you feel has been violated.
Rob Wiley: And I have seen some employers say you're an independent contractor basically so that they don't have to pay that person overtime. And then I've also seen sometimes where the employer will say you're an independent contractor, I want to give you a 1099 at the end of the year and then that has tax consequences on the employee. What, what are the tax ramifications of being an independent contractor?
Colin Walsh: Well I think this is probably one of the big reasons a lot of employers try to classify people as independent contractors is, if you are an independent contractor you, yourself, have to pay the 7 ½ percent FICA tax for employment. And if you're an employee your employer pays them.
Rob Wiley: And FICA is that part of a paycheck you typically see where it says Social Security and all that kind of stuff as they break down the taxes that are taken out. And so instead of your employer paying their share you have to pay the whole amount themselves. When it comes to say, our overtime law though, if someone is told that they are an independent contractor and they're working 50 or 60 hours for the week and it turns out that they're really an employee what are the consequences for the employer? I mean, what can an employee do about that?
Colin Walsh: Well, the employee could bring cause of action and be entitled to that overtime pay. If they're working 50 or 60 hours a week for one employer then they should be paid for that.
Rob Wiley: So they, so you could actually sue for those, that unpaid overtime and then the employer would have to go back, what, I guess as long as the employee was employed and pay that missing money?
Colin Walsh: Yes back to the beginning of the statute of limitations which under the FLSA would be two years or three years if they did it on purpose.
Rob Wiley: Okay.