The Fair Labor Standards Act (FLSA) lays out the federal regulations for the classification of employees. When a business misclassifies its workers — either intentionally or unintentionally — still fines can be imposed, and the business opens itself up to lawsuits from its employees. John B Gallagher, PA, is a law firm that specializes in helping workers in the adult entertainment industry to obtain fair statutory minimum wages under the FLSA and Florida minimum wage laws.
THE CLASSIFICATION OF WORKERS
It would behoove employers to be much more cognizant of the classification of their workers due to the possible fines and litigation involved. In a previous blog post, we outlined in detail the differences in workers. In brief, there are two classes of workers both the IRS and the federal government recognizes: employee and independent contractor. An employee mainly works for one organization, derives most of his or her income from that organization, and also would normally pay taxes through the organization. An independent contractor, on the other hand, usually works for multiple organizations, receives multiple revenue streams, and pays taxes through the self-employment tax — not the employer.
THE SIGNIFICANCE OF THE CLASSIFICATION OF WORKERS
Like most things in this world, the classification of workers affects money. And money is vital to living and to one’s individual living standard. Thus, when a business classifies a worker as an employee, the business not only must pay minimum wage to the employee, but must also pay taxes for Social Security, Medicare, unemployment tax, and payroll tax for that employee and every other employee. Federal, state and local rules, and regulations also kick in when you employ a traditional employee. Furthermore, most small businesses are cognizant of the health care requirements under the Affordable Care Act (ACA or “Obamacare”), which is determined by the size of the business. Businesses aren’t required to offer health benefits if the business is of a certain size. Hence, once the number of employees reaches the designated number, businesses’ costs will increase when they are required to provide employer health care coverage. Each additional employee only adds to the cost of running a business and, thus, decreases profits in the long run.
With independent contractors, businesses don’t have to worry about abiding by these burdensome and expensive rules and regulations or paying minimum wages and all applicable taxes associated with employees. Moreover, businesses are not required to provide health insurance, retirement plans, paid vacation, and other costly fringe benefits to independent contractors. Thus, one can easily see why businesses prefer to hire independent contractors instead of employees.
WHAT ARE THE CONSEQUENCES FOR MISCLASSIFICATION OF WORKERS
The IRS takes misclassification of employees very seriously. It has to. Imagine if a significant portion of employers didn’t pay their share of the taxes on employees. There would be an even bigger shortfall every year, and, in the end, the law-abiding businesses would have to pick up the slack with even higher taxes, which would probably force more businesses out of business — something no one wants.
If the IRS determines you have misclassified employees (intentionally or unintentionally does not matter — you are still liable), you will be subject to paying those previously unpaid taxes and employee benefits as well as significant penalties. Furthermore, since you didn’t pay minimum wage or applicable employee benefits, the employee has a right to those unpaid payments as well as additional damages. In essence, you open yourself up to lawsuits that could cost your business millions of dollars.
With the penalties so steep, one wonders why businesses even try to skirt the law. Why not just pay up in the first place? There are a variety of reasons, including greed, entitlement, and the belief your business is one of millions that the government will either never find out about or doesn’t think is worth the cost of pursuing if found out. This is in some ways the truth. With so many fish to fry, the federal and state governments just don’t have the manpower to investigate every business for compliance. They rely on good faith, which, as we all know, not everyone has.
This is why it’s so important for those who believe that their fair statutory minimum wage rights have been violated to reach out for help. For exotic dancers in Florida, John B. Gallagher, PA is there for you. We investigate every claim we receive of minimum wage violations and pursue every employer who we believe has violated your rights to the utmost of the law. We work diligently to obtain the compensation you deserve such as unpaid wages, and unlawful fees. Retaliation by your employer is strictly forbidden under the law, thereby making termination, harassment, or any other type of adverse employment action against you illegal and subject to even more penalties and additional compensation. Contact us today for a free, confidential consultation.
HOW DOES THE CLASSIFICATION OF WORKERS AFFECT THE ADULT ENTERTAINMENT INDUSTRY?
For decades, strip clubs and other establishments in the adult entertainment industry have illegally classified strippers and exotic dancers as independent contractors, rather than employees, in order to avoid paying minimum wage, overtime, employment taxes to the feds and the state, unemployment compensation, workers’ compensation, and any other employee benefits the company may be required to pay, such as health insurance, sick time, vacation time and other costs and benefits required under the Fair Labor Standards Act (FLSA) and other federal and state laws.
The adult entertainment industry is not the only industry that has and continues to face FLSA violations. The construction industry has been notorious for employee misclassification. The difference is that the construction industry has attracted the attention of the U.S. Department of Labor’s Wage and Hour Division, partly because it’s a larger industry and partly because the construction industry is integral to almost everything most Americans touch every day, such as housing. Let’s face it, ordinary Americans are the ones responsible for changes in society — each and every one of us. Thus, you can see why it’s taken so long for the discrimination in the adult entertainment industry to garner the attention it deserves.
HOW DOES THE CLASSIFICATION OF WORKERS AFFECT ALL OF US?
Why should you care how workers are classified? The classification of workers hits us all where it matters — our pocketbooks. For most of us living in the US, we don’t have any knowledge of what the US labor force was like back before the FLSA. Historians tell us working conditions were deplorable. Envision long working hours with no breaks to eat or use the restroom, performing back-breaking work in a loud factory that ruined your hearing, and at the end of the day, you didn’t even receive enough to buy bread, let alone go out for a night on the town with friends.
Our forefathers instituted the Constitution establishing Congress for many reasons, the primary one being to provide collective services for the people of this great country (such as courts and police) and to protect us from unscrupulous practices (such as being required to house soldiers in your home). Fast forward to the end of the nineteenth century and businesses were definitely taking advantage of the poor. Without the FLSA in 1938, many of us would be in the same boat as our ancestors. We’d be working for hardly any pay in the most horrendous of conditions with no recourse.
Suffice it to say, we’re spoiled here in the 21st century. Our ancestors learned from their mistakes and put in place rules, so we wouldn’t have to suffer like they did. Our obligation is to not let their sacrifices go to waste by turning our backs on our fellow Americans, no matter what industry they are in. It is our responsibility to stand up for the voiceless, the downtrodden, and those who are being taken advantage of, either because they can’t or they won’t. When we see an injustice, it is our responsibility as a citizen of the greatest country on earth to help.
John B Gallagher, PA, as attorney in Florida, has seen a need and stepped up to help others. The adult entertainment industry has long taken advantage of its workers because of the nature of the business. His law firm, John B. Gallagher, PA, focuses on remedying this by taking on the cases of exotic dancers who have suffered from fair statutory minimum wage violations under the FLSA and the Florida labor laws. The firm believes passionately that all are equal under the law and works vigorously to gain fair compensation for all workers. We offer no-obligation, free and confidential consultations. Contact us today!