Employee Misclassification Attorney in Louisville, Kentucky 

Employee vs. Independent Contractor 

Kentucky Revised Statutes Chapter 341.990 states: “Any person who knowingly makes a false statement or representation, or who knowingly fails to disclose a material fact to prevent or reduce the payment of benefits to any worker entitled thereto, or to avoid becoming or remaining subject to this chapter, or to avoid or reduce any payment required of an employing unit under this chapter shall be guilty of a Class A misdemeanor unless the liability avoided or attempted to be avoided is one hundred dollars ($100) or more, in which case he shall be guilty of a Class D felony.” 

Further, the Commonwealth of Kentucky uses its Unemployment Compensation laws and regulations to determine the status of workers. According to these laws, an independent contractor is someone who: 

• Performs a job that is not connected to or similar to the hiring entity’s business 

• Is not under the control or direction of the hiring entity (employer) in the performance of their work 

The Fair Labor Standards Act (FLSA) of 1938 was a piece of landmark legislation concerning employment law in the United States. For starters, it defined the workweek as 40 hours in any seven-day period. Before, the workweek in many industries was whatever employers wanted it to be.  

In addition, the FLSA dictates that hourly workers who log more than 40 hours in a workweek should be paid time-and-a-half for every hour past 40. The FLSA also established the first minimum hourly wage and gave the U.S. Department of Labor (DOL) the power to enforce the FLSA through regulations and oversight. 

Note that the FLSA overtime rule applies to those who are paid hourly wages. The act exempts professional and managerial workers who are paid a salary, meaning for the most part, they are not eligible for overtime, but their salaries would have to match or exceed what they would earn in 40 hours under the national or state minimum wage. (States and localities can set minimum wage rates so long as they exceed the federal standard, currently $7.25 an hour.) 

If you feel that your employer is misclassifying its workers as independent contractors, contact me at Chris Sanders Law PLLC in Louisville, Kentucky. I will look into the situation and help mobilize a response. I spend a good deal of my time fighting for social justice, and treating workers as employees with full benefits and legal considerations is certainly a cause worth fighting for. 

The law frequently changes. On January 7, 2021, days before the Biden Administration took over, the Trump-era Department of Labor (DOL) issued a regulation defining independent contractors as being “in business for themselves as opposed to being economically dependent on the potential employer for work.” 

In October 2022, the newly constituted DOL under President Biden issued a Notice of Proposed Rulemaking (NPRM) to better align the issue of defining an independent contractor with the intentions of the FLSA. The NPRM notes that the 2021 rule “does not fully comport with the FLSA's text and purpose as interpreted by courts and departs from decades of case law applying the economic reality test.” 

The 2022 NPRM seeks to base a worker’s status — as an employee or independent contractor — on a variety of factors, but primarily “whether the work [being performed] is integral to the employer’s business.” While the distinction between the 2021 and 2022 interpretations may appear subtle to the layperson, the Biden DOL believes that its standard will more accurately determine who is an employee and who is an independent contractor. 

There are other standards still. The Kentucky Office of Unemployment Insurance (UI) uses different criteria to determine whether a worker is an employee or an independent contractor. The two major tests it utilizes are: 

• THE RIGHT TO CONTROL TEST: The employer is asked several questions regarding how much control they have over the worker’s hours, work environment, and other factors. 

• THE NATURE OF BUSINESS TEST: The state can declare a worker to be an employee if he or she is doing work that is or would otherwise be performed by the company’s employees. 

The UI office website warns that there are “serious consequences” for employers who misclassify their workers, including: 

• Tax penalties and interest; 

• Labor law and safety violations; 

• Back unemployment insurance premiums; and 

• Costly lawsuits if a worker is injured on the job.

Employers have often resorted to classifying workers as independent contractors rather than as employees to avoid providing benefits, paying for workers’ compensation insurance, contributing to the unemployment insurance (UI) system, having to compute and pay taxes, and generally circumventing the requirements of the Fair Labor Standards Act (FLSA). If you feel you've been misclassified, call me.