Every business and employer must carefully classify its workers as employees or independent contractors to avoid problems with multiple federal laws. The United States Department of Labor is empowered to investigate instances where employers misclassify workers as independent contractors to avoid federal wage and hour law. Legal and illegal immigrants can sue employers who misclassify workers. Proper classification of employees and independent contractors is even more crucial with the federal government’s new focus on controlling immigration.
Two federal statutes operate in tandem to prohibit employers from misclassifying workers for the purpose of avoiding wage and hour law. Excellent authority for understanding these two statutes is a case from the Eighth Circuit Court of Appeals, Lucas v. Jerusalem Café, LLC, 721 F.3d 927 (8th Cir. 2013). The Fair Labor Standards Act (“FLSA”) requires an employer to pay the minimum wage and overtime to any employee. Employees, by definition, include legal and illegal aliens (immigrants). The Immigration Reform and Control Act of 1986 (“IRCA”) is meant to discourage employers from hiring unauthorized workers. The FLSA and IRCA work together by assuring the wages and employment of lawful residents are not adversely affected by the competition of illegal aliens.
The United States Department of Labor has long held that FLSA standards apply to aliens in the country without legal status. During World War II the Department of Labor granted the minimum wage to prisoners of war. The point is not to reward prisoners who waged war on the United States, rather it is to discourage and penalize employers who might prefer illegal aliens because they are cheaper to hire and easier to control. Congress funds the Department of Labor in part, “in order to deter the employment of unauthorized aliens and remove the economic incentive for employers to exploit and use such aliens.”
Not only the Department of Labor can bring an action against employers who fail to provide the minimum wage to illegal aliens, so too may the illegal alien. The FLSA includes a private right of action that legal and illegal aliens may take advantage of, as well as US citizens. That is one of the holdings in the Lucas case and others, including one arising from Hurricane Katrina. Lima v. Int’l Catastrophe Solutions, Inc., 493 F.Supp.2d 793 (E. Dist. La. 2007).
After Hurricane Katrina along the Gulf Coast, businesses recruited immigrants to work as manual laborers in a clean-up of the gulf. They were hired as independent contractors, but the immigrants alleged they were actually treated like employees. They sued as a class under the FLSA. The workers alleged they were misclassified as independent contractors so that the employers would not have to pay overtime wages under the FLSA. Through affidavits, the immigrants maintained they were housed in a hotel with 350-400 other such workers, and never received more than straight pay for over 40 hours of work per week. The court allowed the case to move forward and denied a motion to dismiss because, in part, of longstanding case law that allows immigrants the right to sue under the FLSA. Immigrants, along with native-born citizens, must be properly classified as employees or independent contractors, and employees must receive minimum wage, overtime, and all benefits provided for under the FLSA.
Employers must carefully consider whether their workers are truly employees, and classify them as such. The FLSA and IRCA work together to protect all workers, including legal and illegal aliens, from wages set below federal mandates. All employers must know the criteria for being an employee and abide by it.