What to do if there is a discrepancy in an independent contractor’s salary payment?

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What to do if there is a discrepancy in an independent contractor’s salary payment?

I provide ESL instruction to individuals for a company. I was told compensation is based “per client, per hour” unless I am assigned a “group” by HR and accounting. 3 times a week I provide instruction for 2 individuals at the same time. I ask for verification for each invoice; which I received and was compensated per client. Now, the company claims that I owe them for half of those hours. They informed me that they will be deducting this from my next paychecks, leaving me without an income for more than 1 month. I am not trying to take money I am not owed; I did what I was told. Is this legal?

Asked on April 20, 2011 under Employment Labor Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A contractor needs too be paid per her contract (including an oral or verbal agreement). If there was an accidental overpayment (e.g. paid incorrectly or paid for too many hours), the company engaging their services may seek the return of that money. Technically, they can't arbitrarily deduct it from the next payments unless the contractor agrees; but if the contractor doesn't agree, they may choose to not employer her in the future unless there's some contract requiring they give her a certain amount of work. Also, if the contractor won't agree to a reduction or "give back" or offset against overpayment, the company could try to sue her for the funds due. Therefore, IF the reduction is legitimate, it's probably best to work out some payment schedule.

However, if you disagree that that you owe this money and you can prove that you worked and billed as per their instructions, they should not be able to recover it--as a contractor, if you did what you were told, you should be paid according to the instructions and agreement.

Also, a bigger issue may be that you might not be an independent contractor. If the company has substantial control over where, when (including hours), and how you do your job, it may be that you are an employee; if so, you may be eligible for overtime and benefits, they may have to pay the employer share of FICA for you, etc. Go to the Dept. of Labor website; you should be able to find information about when an "independent contractor" is really an employeel. If you think this might be the case, you may wish to consult with an employment attorney.


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