The federal Fair Labor Standards Act of 1938, as amended,
29 U.S.C. §§ 201-219 (the "FLSA"), and its implementing regulations,
29 C.F.R. § 510 et seq., mandate that most employees in the United
States be paid at least the federal minimum wage of $7.25 per hour for all
hours worked and overtime pay at 1½ times their regular rate of pay for all
hours worked in excess of 40 hours in a workweek.
So, too, the New York State Minimum Wage Act, N.Y. Labor
Law § 650 et seq., and section 142 of Title 12 of the New York
Code of Rules and Regulations mandate that employees in New York be paid at
least the New York minimum wage of $7.25 per hour for all hours worked.
Covered employees who work overtime must be paid at a rate that is 1½ times their
regular, "straight-time" hourly rate of pay. 12 N.Y.C.R.R. §
By contrast, neither federal law nor New York State
law requires companies to pay, to independent contractors, either the minimum wage or overtime pay at one-and-one-half
times the contractor's regular rate. As a result, the standards used
in determining, under New York law, whether an individual is engaged as an
employee or as an independent contractor, are of great importance to businesses
in the Empire State.
The New York State Labor Law states
that the term " 'Employed' includes permitted or suffered to
work." N.Y. Labor Law § 2(7). Similarly, the New York State Minimum
Wage Act provides that the term " 'Employee" includes any individual
employed or permitted to work by an employer in any occupation . . . ."
N.Y. State Labor Law § 651(5).
To determine if an employment relationship exists in New
York for purposes of overtime pay and the minimum wage, courts use the same
test that is utilized under the FLSA. This test is called
the 'economic reality' test. The purpose of this test is to
determine "whether, as a matter of economic reality, the workers depend upon
someone else's business for the opportunity to render service or are in
business for themselves." Brock v. Superior Care, Inc., 840 F.2d
1054, 1059 (2d Cir. 1988). In the former circumstance, the workers are
employees; in the latter circumstance, the workers are independent contractors.
In applying the economic reality test to ascertain
whether an employment relationship exists in New York for overtime and minimum wage purposes, courts principally
examine five factors:
See generally Brock,
840 F.2d at 1058-1061. It should be noted that, in New York State, the
standards used in determining whether a person is an employee or an
independent contractor for purposes of the minimum wage and overtime pay overlap with, but are not
identical to, the standards used in determining whether an individual is
an employee or an independent contractor for purposes of New York State
anti-discrimination laws, the New York State Workers' Compensation Law, or
the New York State Unemployment Insurance Law, respectively. As a result,
that a company's worker in New York holds employee status or independent
contractor status for purposes of the minimum wage and overtime pay does not
necessarily mean that he or she holds the same status for purposes of State
anti-discrimination laws, workers' compensation benefits, or unemployment
Call the Law Offices of David S. Rich, LLC at (212)
209-3972 to speak with a knowledgeable labor and employment lawyer about making sure
that your company complies with overtime pay and other wage and hour laws, or
to retain a skilled overtime attorney to defend your company in unpaid
overtime lawsuits or other wage and hour litigation.
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