HR Templates, Toolkits and Resources

Independent Contractor/FLSA Exempt Status/Overtime and Youth Rules

Calling a worker an Independent Contractor, Intern or Volunteer without appropriate justification or paying a W-2 employee a salary (without overtime) are decisions which could result in serious liability for organizations that do not understand the regulations and guidance related to these areas. Misclassifying someone as an independent contractor or exempt employee can result in a requirement to backpay overtime for years, and in some cases to compensate for benefits which a worker should have been entitled to. The DOL could even choose to refuse to allow a company to categorize certain jobs or groups of jobs as exempt and overtime would have to be paid for all employees going forward. This toolkit will support your decision-making process and prevent excess risk.
FAQs and Overview
  • Catapults’s FLSA Status/Overtime and Youth Rules FAQ includes the following information:
    • Overview of Fair Labor Standards and Minimum Wage Guidelines
    • Youth Employment Rules
    • Classifying Workers and Overtime Pay Rules
    • Overtime Pay Calculation and Comp Time Rules
  • Catapult’s Employment Classification FAQ includes the following information:
    • Independent Contractor Versus W-2 Employee
    • What is a Volunteer?
    • What is an Intern?

It is the employer’s responsibility to classify a worker as an employee or a contractor.  It is not the employee’s option to choose to work independently.  There are multiple factors to be reviewed to determine a worker’s status, and to therefore prevent liability for back benefits or taxes.  These factors are outlined in the US DOL Wage & Hour Division Fact Sheet #13

Tools and Templates

These links may be helpful in calculating overtime, developing policies related to FLSA, and in ensuring appropriate wage deductions:

To qualify for an exemption, an employee must meet specific duties tests (for “any employee employed in a bona fide executive, administrative, or professional capacity or in the capacity of outside salesman.”) and, in most cases, minimum compensation requirements.

Exploring Further

It is important to understand how exempt pay rules impact many areas of your organization, to include when to compensate non-exempt employees, and when you may deduct from the salary of an exempt employee. Remember, each state has different rules