Some contracts label workers as "independent contractors" with the goal of avoiding obligations such as providing benefits and protections like minimum wage, overtime pay, and safety standards. However, courts and agencies have repeatedly stressed that simply calling someone a contractor, even in a written agreement, does not define their legal status. The report advises employers that reclassifying workers as contractors to escape legal responsibilities is unlawful. Instead, the true nature of the working relationship should be the basis for determining classification. The Department of Labor cautions that it regularly contests these misclassifications and takes action to support workers, even when they are labeled as contractors.

Tackling the misclassification of employees as independent contractors is essential for upholding labor laws. Under federal labor regulations, only employees are eligible for the benefits and protections those laws offer. When workers are incorrectly classified as independent contractors, they lose legal rights such as minimum wage, overtime pay, and health and safety protections. Some employers attempt to reinforce these misclassifications by having workers sign agreements labeling them as independent contractors. However, such agreements do not define a worker's legal status as an employee or contractor.

The Department has consistently asserted that a clause in an agreement designating a worker as an independent contractor is irrelevant, or at least not conclusive, in deciding whether the worker is an employee or contractor under the Fair Labor Standards Act. In other words, merely labeling an employee as an independent contractor does not remove the protections guaranteed by the FLSA.

The Department regularly enforces actions against employers who attempt to defend their non-compliance by falsely asserting that workers are independent contractors under the FLSA. In these situations, the Solicitor of Labor consistently challenges the notion that a worker’s contractor status is validated by an "independent contractor agreement" they were required to sign. This is because, in most misclassification cases, such agreements do not represent meaningful negotiation between the parties or the worker’s intent to run an independent business.