Can independent contractors receive overtime pay?
A. Independent contractors are not eligible for overtime pay. However, some employers may classify workers as “independent contractors” to avoid paying overtime. To determine whether a worker is a true independent contractor, courts typically use the “economic realities” test. This test analyzes the amount of control exercised by the employer; the skill and initiative needed to carry out the job tasks; the extent of the relative investments of the employee and employer; the degree to which the employee’s opportunity for profit and loss is determined by the employer; the extent to which the employee’s services are vital to the business; and the permanence of the worker/employer relationship. The courts typically conclude that if two of these factors cut against the existence of an employer-employee relationship the worker will be considered an independent contractor and thus not eligible for overtime pay.