Receiving a Form 1099 or being labeled an independent contractor does not necessarily determine your employment status. If the reality of your working relationship shows that you depend on a company for work—rather than operating an independent business of your own—you may qualify as an employee entitled to wage-and-hour protections.

Employee misclassification can deprive workers of overtime pay, minimum wages, payroll-tax contributions, and other workplace protections.

Your Job Status Depends on the Work, Not the Label

The Fair Labor Standards Act (“FLSA”) protects covered employees, but not workers who are genuinely independent contractors.

The U.S. Department of Labor (“DOL”) explains in Fact Sheet #13: Employment Relationship Under the FLSA that no single label or paperwork choice controls. The real working relationship matters.

NOTE: Signing an independent-contractor agreement or receiving Form 1099-NEC does not automatically make a worker an independent contractor under the FLSA. Likewise, a worker who is an employee under the FLSA cannot waive federal minimum-wage or overtime rights.

Signs of Employee Misclassification

No single fact automatically decides status. Consider the full economic reality of the relationship.

Warning signs can include:

• The company sets your schedule, workload, assignments, or work location.
• A supervisor directs how you perform the work, inspects it, disciplines you, or can remove you from the job.
• The company sets your hourly rate or price and you cannot meaningfully negotiate it.
• You earn more mainly by working more hours – not through business decisions that create a genuine opportunity for profit or risk of loss.
• The company supplies the facilities, materials, heavy equipment, or other significant investment needed for the work.
• You work continuously or indefinitely for the company rather than marketing services to multiple customers as an independent business.
• Your work is part of the company’s production process or central service.
• You are paid by the hour, tracked on company time records, and do not submit bids or invoices as a separate business.

Current DOL Guidance and the Proposed Independent-Contractor Rule

The DOL’s 2024 independent-contractor rule applies a totality-of-the-circumstances “economic realities” test to determine whether, under the FLSA, a worker is economically dependent on a potential employer for work or is instead in business for themself.

The rule identifies six factors:

1. Opportunity for profit or loss depending on managerial skill;
2. Investments by the worker and the employer;
3. Permanence of the work relationship;
4. Nature and degree of control;
5. Extent to which the work performed is an integral part of the potential employer’s business; and
6. Skill and initiative.

No single factor or combination of factors automatically determines a worker’s status, and additional factors may be considered if they bear on whether the worker is in business for themself or economically dependent on the potential employer for work.

The DOL explains the six factors in greater detail in Fact Sheet No. 13: Employee or Independent Contractor Classification Under the FLSA.

NOTE: The 2024 rule remains in effect for purposes of private litigation, although its legality is the subject of ongoing litigation. In May 2025, the DOL issued Field Assistance Bulletin No. 2025-1, instructing DOL’s Wage and Hour Division field staff not to apply the 2024 rule’s analysis when determining employee or independent-contractor status in FLSA investigations. Instead, WHD currently applies the analysis contained in the July 2008 version of Fact Sheet No. 13, as further informed by Opinion Letter FLSA2025-2, in its enforcement matters. The bulletin does not change the rights of employees or the responsibilities of employers under the FLSA.

In February 2026, the DOL published a Notice of Proposed Rulemaking that would rescind the 2024 rule and replace it with a different analysis for determining employee or independent-contractor status under the FLSA, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. As of August 17, 2026, the proposed rule has not been finalized.

Rights Misclassified Workers May Be Denied

Overtime Pay

Unless an exemption applies, covered employees generally must receive at least one and one-half times their regular rate for hours worked over 40 in a workweek. Overtime ordinarily cannot be waived by agreement. Read the DOL’s Fact Sheet #23: Overtime Pay Requirements.

Minimum Wage and Payment for All Compensable Time

Covered employees must receive at least the applicable minimum wage for all compensable hours. Depending on the facts, required pre-shift or post-shift activities, job meetings, training, or other time the employer permits or requires may count as hours worked. See the DOL’s FLSA hours-worked guidance.

Accurate time and pay records

Covered employers must keep accurate records for nonexempt employees, including daily and weekly hours, pay rates, overtime earnings, deductions, total wages, pay dates, and pay periods. Review Fact Sheet #21: FLSA Recordkeeping Requirements.

Protection from retaliation

The FLSA prohibits discharging or otherwise discriminating against a worker because the worker filed a complaint or participated in a proceeding under the law. Learn more from the DOL’s FLSA anti-retaliation guidance.

FLSA Coverage Caution: Whether the FLSA applies, whether a worker is an employee, whether an exemption applies, and how damages are calculated are fact-specific questions. State and local wage laws may provide additional or greater protections.

• Preserve your records. Save paychecks, 1099 forms, contracts, schedules, texts, emails, time sheets, app records, job instructions, and photographs of workplace notices or equipment.
• Track your time. Write down each day’s start time, end time, meal periods, job locations, and unpaid work.
• Document control and business reality. Note who sets your schedule and rate, assigns work, supervises you, supplies major tools or materials, and decides whether you can hire helpers or work for others.
• Do not delay. Wage claims are subject to time limits that vary by claim and jurisdiction.
• Seek legal guidance. An employment attorney can evaluate which federal, state, and local standards apply to your work and whether time limits may affect your claims.

Contact Kehoe Law Firm, P.C. 

Our firm is available to evaluate potential claims involving employee misclassification, unpaid wages, and unpaid overtime. A confidential consultation can help you understand which laws may apply to your work and whether you may have a legal claim. For a free, no-obligation legal evaluation, contact:

Michael Yarnoff, Esq.
(215) 792-6676, Ext. 804
[email protected]
[email protected]

About Kehoe Law Firm, P.C.

Kehoe Law Firm, P.C. is a nationally recognized, plaintiff-side class action law firm representing investors and consumers in matters involving securities fraud, corporate misconduct, mergers and acquisitions, antitrust violations, whistleblower claims, data breaches, consumer fraud, employment law violations, and retirement-plan mismanagement. Its attorneys have served as lead or co-lead counsel in major securities cases, recovering more than $10 billion for institutional and individual investors.

All representation is provided on a contingency-fee basis, and plaintiffs are not responsible for attorneys’ fees, court costs, or litigation expenses. Any request for attorneys’ fees and expenses will be subject to court approval. 

PHONE

Tel: 215-792-6676

EMAIL

[email protected]