The U.S. Circuit Court of Appeals for the Tenth Circuit recently overturned a ruling concerning whether a janitorial service provider's workers were employees or independent contractors. Although the employer required the workers to form corporate entities and sign franchise agreements, the appellate court determined they were still employees under the Fair Labor Standards Act based on other factors.
In its suit against the employer, the U.S. Department of Labor had alleged that the workers were misclassified as independent contractors and that the employer failed to keep required time records.
The appellate court's ruling is in line with other decisions that determine a worker's classification as "employee" or "independent contractor" is not based on labels and business structures, but on the actual conditions of the working relationship. In this case, the court ruled that the corporate-franchisee structure was not sufficient to determine that the workers were independent contractors. Philip Bruce "Employers must still use caution when using independent contractors" employerlinc.com (Oct. 31, 2018).