If you work for a contractor or subcontractor in Texas, you may be confused as to your status under the wage laws. Many of these employees are handed a 1099 form and are told that since they work for contractors they are not eligible for overtime pay.
There are many situations where companies use subcontractors in order to wash their hands of the federal labor laws and avoid any responsibility for overtime and minimum wage considerations. If you work for contractors or subcontractors, read this article to find out how this could affect your paycheck.
Contractors and Subcontractors
When you work for companies under a temporary, leased, or contract basis sometimes it is not clear who your employer is. Contractors are usually hired for a project and many times they employ subcontractors to perform different parts of that job. Contractors may also hire subcontractors instead of permanent staff, especially when projects are short-term.
Many workers who are employed by subcontractors for cleaning, landscaping, manufacturing, IT work, or other services may actually be eligible for overtime pay. Often times the general contractor who hired the subcontractor is on the hook for your compensation as well. This becomes particularly important in cases where your most direct employer is having financial problems and cannot pay you. In those cases, we have used the joint employer doctrine to identify other entities that might also be liable.
Joint Employer Liability
Courts determine if a joint employment situation exists by considering the "economic realities" of the situation. Some of the following factors can be used to determine the relationship for employees working for contractors and/or subcontractors:
• Does the employer own the equipment/location where work is performed?
• How much oversight does the employer have on the job?
• Does the employee work for both companies, or is there a shared arrangement?
• Did either company control the duties and responsibilities of the employee?
• Is there common management of the employers?
• Is the employee on separate payrolls and works over 40 hours a week?
What the FLSA says
The FLSA states that even though two companies may be separate entities, if an employee works for "joint employers," each company will be held liable for FLSA compliance.
We have represented many workers who worked for contractors or subcontractors and were not paid the wages they were owed. Even though these companies contract out work to other companies they still have to abide by the pay laws under the Fair Labor Standards Act.
We represented a group of furniture delivery drivers who were presumably employed by a delivery company, instead of the furniture company itself. In that case, we proved that the "delivery" company was really just a shell company. The evidence showed that the furniture company provided the delivery trucks, uniforms, driving routes, issued rules for how to load and unload furniture and even had an office for the drivers to operate from. In that situation, the furniture company did everything except pay the drivers directly. Instead the furniture company paid the "delivery company" who in turn paid the drivers. Under those facts, the furniture company was a secondary or joint employer of the drivers and was required to pay them their overtime pay that was due.