Texas workers who feel they are wrongly classified as independent contractors may have won a victory following a decision by a federal district court involving a strip club dancer. The case involved a contract similar to those commonly signed by independent workers including limousine drivers, cable installers and truck drivers.
Most of these contracts come with an indemnification clause that says if workers seek protection under the Fair Labor Standards Act, they must pay back money to their employers for damages. In this particular case, the Las Vegas strip club where the dancer worked was trying to force her to pay back dance fees from customers. The woman's attorney described the clauses as having a 'chilling effect."
Courts have not been united in their response to breach-of-contract counterclaims by companies. Some have said that whether the company can proceed with its counterclaim is based on whether the worker is covered by the FLSA. In this case, the judge ruled that contracts are not sufficient to limit or waive statutory rights. Under federal wage law, the judge asserted, the dancer did not forfeit her entitlement to benefits despite signing the contract. The court also said the company was unable to demonstrate damages from what it claimed was a breach.
Unfortunately, many true employees are misclassified as independent contractors by their companies. This could be for a variety of reasons, but in many cases it is due to employers not wanting to bother with payroll taxes or paying overtime. People who are in this position may want to meet with attorneys in order to see what rights they have.