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Independent Contractor wages investigated - Home building companies targeted for overtime laws

DOL investigates independent contractor wages, overtime pay and working conditions for building contractors.

Home building companies are unhappy with the federal government this month as the Department of Labor has requested employee information from several homebuilding companies including timesheets, pay rates, and contractor information. As an employee of custom home builder companies your status under the labor laws can greatly affect your pay every month.

The DOL pay practice investigation is targeting Fair Labor Standards Act regulations affecting:

• independent contractor and subcontractor overtime pay, and
• employer responsibility of payroll taxes.

Independent contractor industry is a hotspot for labor law violations.

Home building companies rely heavily on contractors to do electrical work, plumbing, and carpentry, but many workers are treated as independent contractors and don't receive benefits, overtime pay and employers avoid payroll taxes. Many employers intentionally misclassify employees to cut costs and this makes the building industry a hotspot for illegal pay and working conditions including minimum wage and overtime violations.

Wage lawyer says contractor violations are rampant, but not easy to detect.

"Independent contractor violations are never easy to spot because the law in this area is not clear-cut," said employment lawyer Galvin Kennedy. "There are complex areas of FLSA law here including subcontractor eligibility and joint-employer liability."

Some of the home builder companies contacted by the Department of Labor include:

1. Pulte Homes, Inc. - based in Bloomfield Hills, Michigan - Employees: 13,400 (2006)
2. Lennar Corporation - Based in Miami: Has built nationwide including Arizona, California, Colorado, Delaware, Florida, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas, Virginia.
3. D.R. Horton - based in Fort Worth, Texas - Employs 3,000 workers nationwide
4. KB Home - based in Los Angeles - Employs nationwide including California, Texas, Arizona.

So, when is a construction worker (carpenter, electrician, plumber, welder, painter, dry wall installer, landscaper, foundation worker, etc.) really an employee instead of an independent contractor?

The courts considering this issue use a test called the "economic reality test" to determine if a worker is an employee or an independent contractor. The "economic reality test" looks to the following factors.

• the degree of control exercised by the alleged employer;
• the extent of the relative investment of the employee versus the employer;
• the degree to which the employee's opportunity for profit and loss is determined by the employer; 
• the skill and initiative required in performing the job; and 
• the permanency of the relationship.

What to do if you think you are an employee owed overtime, not an independent contractor.

If you are a construction worker working more than 40 hours in a workweek for the same company week after week, the chances are that you are an "employee" not an independent contractor. That means you are due overtime pay. Order a free copy of our wage guide, The 10 Biggest Mistakes that can Hurt Your Wage or Overtime Claim, written by employment lawyer Galvin Kennedy to learn why you may be owed money and how you can recover double your back pay and have your employer pay your attorney's fees. Call 888-449-2068 to order your free copy today.