We frequently see law firms advertising in the media their availability to prosecute unpaid wage claims.  Various local firms are engaging in the practice of pursuing claims under the Federal Labor Standard Act of 1938.  This statute confers a cause of action to any employee who has not been adequately compensated for hours worked in excess of the forty-hour work week.  The law provides that any employee that has worked an excess of forty hours a week should be compensated at a rate of time and a half for each hour worked in excess of the forty hours.  For example, if an employee is compensated at a rate of $10.00 per hour, each hour that he works in excess of the forty hours should be paid at a rate of $15.00 per hour. 

I have litigated various cases under this statute, and I would like to offer certain recommendations that could be useful to any employee or employer that finds himself/herself involved in this type of dispute.  First of all, the statute only applies to employees and not to independent contractors.  I would like to clarify, however, the fact that an employee is classified as an independent contractor does not mean that, as a matter of law, he/she is a true independent contractor. Even if the worker has signed a contract acknowledging that he or she is an independent contractor, a Court could still rule this does not preclude the Court from finding that he/she was in reality an employee. 

There are various factors taken into consideration in determining the employer/employee relationships.  The control by the employer is one of the most important factors in making this determination.  If the employee provides services on a continuous basis at the employer’s premises, under the supervision of the employer, it is highly likely that the Court will find that the worker is an employee.   If the said employee works an excess of forty hours per week, he has a right to be compensated in accordance with the statutes and can pursue a claim against his employer.

When faced with this type of claim, the employer must be very careful insofar as the statute provides for imposition of severe penalties and for payment of attorney’s fees incurred by the employee in pursuing the claim.  Because we are dealing with a Federal Statute, the United States District Court has jurisdiction to entertain such a claim and not all attorneys practice in this Court.  In addition, the statute has certain exemption which would apply to certain enterprises, an example of which applies to those businesses whose gross income does not exceed $500,000.00 per year.  Therefore, any entrepreneur that is faced with dealing with such a claim should seek out an attorney experienced in this field.