Employment Discrimination Blog

Tuesday, November 30, 2021

Unpaid Overtime and the “Economic Reality Test”

With a shortage of workers in the workforce, more people are working longer hours than before. Unfortunately, not all of them are being compensated for their work.

Under the Fair Labor Standards Act, employees are entitled to overtime pay. However, this is not true for independent contractors. In order to prove that you are an employee and are entitled to overtime pay, you must use what is called the “economic reality test.” Under this test, you can demonstrate that you have worked overtime but remain unpaid for it.

Employee vs. Independent Contractor

As mentioned, these types of cases depend upon whether a worker is an employee or an independent contractor at the time that they worked overtime. Under this economic reality test, the court must look at the “economic reality” of the “relationship between the alleged employee and the alleged employer.”

Factors of the Economic Reality Test

There are multiple factors under the economic reality test, which include:

  • The nature and degree of the alleged employer’s control as to the manner in which the work is to be performed;
  • The alleged employee’s opportunity for profit or loss depending upon his managerial skill;
  • The alleged employee’s investment in equipment or materials required for his task, or his employment of workers;
  • Whether the service rendered requires a special skill;
  • The degree of permanency and duration of the working relationship; and
  • The extent to which the service rendered is an integral part of the alleged employer’s business.

Looking at the Economic Dependence of an Alleged Employer

While these factors are not exhaustive, they go to show that the court must examine whether an economic dependence exists based upon viewing all of the facts. Put simply, the more control that a defendant has, the greater the economic dependence. For instance, was the employee referred to as “in-house,” was he or she obligated to attend weekly meetings, was he or she required to work for the employer exclusively, etc. It’s important to look at the actual policies of the alleged employer. When there seems to be a high degree of control, it’s likely that an employer-employee relationship exists and that the employee is therefore entitled to overtime pay.

The GA Employment Law Attorneys at Pankey & Horlock, LLC Can Help

If you believe that you have been wrongfully denied overtime pay, you may be entitled to compensation. However, in order to win your case, it’s important that you seek the assistance of a knowledgeable and experienced Georgia employment law attorney, who can help to point you in the right direction. Understanding the law and the evidence necessary to prove your case is key. Otherwise, you may not know how to proceed.

Fortunately, the attorneys at Pankey & Horlock, LLC understand the importance of such cases and are here to help. To learn more, or to schedule a consultation, contact us today!

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