Because of the COVID-19 epidemic sweeping through the country, millions of people found themselves filing for unemployment benefits for the first time in their lives.

Among the millions who have filed or will file for unemployment, some will be denied benefits (and some may not even seek benefits) because they were classified as an “independent contractor.”

Companies often push the line in classifying workers as independent contractors because there are several benefits. The company avoids payroll taxes, unemployment insurance, and workers compensation benefits. Independent contractors also are not protected by minimum wage and overtime laws.

In 2019, the Arkansas General Assembly passed the “Empower Independent Contractors Act of 2019,” which sets the standard for determining the status of an individual as an employee or independent contractor for wages, taxation, workers’ compensation, and other issues. The Act adopts the IRS’s 20-factor test, which focuses on three general categories: (1) behavioral control; (2) financial control; and (3) relationship of the parties. No single factor is controlling, and the individual factors are weighted in significance to the facts in a particular case. That said, courts often treat the alleged employer’s right to control the manner right to control the manner in which the work is performed as the most important consideration.

Despite the law, many employers treat workers as independent contractors despite maintaining almost total control over the working relationship. While calling workers “independent contractors,” business often set the work schedule, provide training, impose non-compete agreements, and tightly control the work being performed. In those instances, the worker is likely misclassified ad entitled to overtime whenever they work more than 40 hours in a workweek.