What constitutes an independent contractor? While the definition is often fuzzy, and even puzzling to some HR managers, it is now crystal-clear to Cascom Inc. in Fairfield, Ohio.
Cascom learned the definition the hard way. The Wage and Hour Division of the U.S. Department of Labor investigated the cable company and ruled that it had misclassified 250 cable guys as independent workers when they should have been paid as company employees.
Result: Cascom violated the Fair Labor Standards Act and was found liable for nearly $1.5 million in back wages and liquidated damages.
The fine line between independent contractors and true company employees was addressed by Wage and Hour in a release trumpeting the action against Cascom.
“Under the FLSA, an employment relationship must be distinguished from a strictly contractual one,” Wage and Hour said. “An employee — as distinguished from a person who is engaged in a business of his or her own — is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business that he or she serves.”
The case was filed in 2009. Cascom has since gone out of business, Wage and Hour noted, so it will attempt to collect both from the bones of the company and the pockets of the owner, Julia Gress.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
