On Sunday, Jan. 12, the U.S. Department of Labor issued a final rule on liability for franchisors and companies that outsource services to staffing agencies. The new rule, which replaces a policy put in place by the Obama administration, makes it harder for employees to prove that these companies are legally responsible when a franchisee or staffing firm fails to pay the minimum wage or overtime.
For the so-called "gig economy" to be profitable, it relies on one fundamental idea. The workers who perform the gigs are not employees of the company but independent contractors.
In general, the Fair Labor Standards Act (FLSA) requires all covered, non-exempt workers to be paid 1-1/2 times their regular rate of pay as an overtime premium whenever they work more than 40 hours in a given workweek. This leads to the question, what is the employee's regular rate of pay?
Some working people prefer the flexibility that comes with being an independent contractor. Many more people, however, prefer the stability that comes with being an employee. Sometimes employers wrongly classify employees as independent contractors. This practice is known as misclassification. Misclassification violates the federal Fair Labor Standards Act (FLSA) and many state laws as well. More importantly, misclassification exploits working people.
Under the Maryland Wage Payment and Collection Act, employees have the right to be paid on time. Employees can generally pursue lawsuits in order to recover any unpaid wages from their employers after a paycheck is at least two weeks late. In some industries, however, it can be very difficult for employees to recover wages. This may be true in a field like construction, where there are numerous companies and supervisors involved in a project.
Under federal and Maryland state laws, the minimum wage is currently set at $7.25. However, many people do not know that restaurant servers are often among those who can be paid a much lower wage, just $3.63 an hour, plus tips, here in Maryland.
Readers of our Greenbelt Employment Law Blog may remember our discussion in February of the technology industry's move to limit overtime pay. Of course, the federal Fair Labor Standards Act as well as state statutes protect the wage and overtime rights workers across the U.S. Nonetheless, there are numerous exceptions built into employment law that can make it quite confusing to determine which employees have the right to overtime pay.