Independent Contractor Or Employee?

One of the more difficult questions in employment law – and one that gets employers in a lot of trouble – is are you an employee or an independent contractor? Recently, the 11th Circuit Court of Appeals determined that a Florida District Court was wrong when it decided that a group of cable, Internet and digital phone technicians were independent contractors. Why is this determination so important? The Fair Labor Standards Act (FLSA) provides important protections to nearly all workers. It guarantees that you are paid at least minimum and that all non-exempt workers receive overtime compensation at a rate of one and one-half times their standard rate of pay for each hour worked in excess of 40 hours in any one work week. Typically employees are protected by the FLSA and independent contractors are not.

If you have questions about the FLSA or believe that you have not been receiving all the benefits you deserve, it is a good idea to speak to a knowledgeable Atlanta FLSA attorney right away.

In the recent FLSA case, Scantland v. Jeffry Knight Inc., the Court of Appeals evaluated the nature of the technicians work relationship with Knight Enterprises.

Despite the fact that each of the technicians had signed an “Independent Contractor Services Agreement,” this document wasn’t the determining factor in the nature of their work arrangement. For example, even though the agreement said they could reject work assignments, the workers knew if they did they might be fired or have additional work withheld. As a result, in addition to looking at the contract, the Court of Appeals incorporated the “economic reality” test to evaluate if the workers were independent contractors or employees.

Using the six-factor “economic reality” test, the court determined four of the factors pointed toward an employment relationship:

• The company exercised “significant control” over the technicians, including requiring the workers to sign into a service called “Work Force Management” that kept track of “when they arrived on a job, when they completed a job, and what their estimated time of arrival was for their next job;”
•The workers’ opportunity for profit or loss depended on the company’s work orders. For example, the company could deduct money from the technicians’ paychecks if they failed to meet client specifications for an installation, incorrectly used Work Force, misplaced inventory, or arrived late to work;
•The technicians generally had long tenures with the company; and
•The technicians typically provided services that were an “integral part” of Knight’s business.

Further, the technicians alleged they could not work for other companies. They also alleged claimed they regularly worked five to seven days per week, with their total hours exceeding 40, likely entitling them to overtime pay if they were considered employees.

Two other factors, however, pointed “weakly” to an employee status:

•The technicians used their own equipment; and •The technicians had special skills.

Observing that the six factors serve as “guides,” and that no one factor is controlling, the Court wrote:

“More importantly, the final and determinative question must be whether the total of the testing establishes the personnel are so dependent upon the business with which they are connected that they come within the protection of the FLSA or are sufficiently independent to lie outside its ambit. Ultimately, in considering economic dependence, the court focuses on whether an individual is ‘in business for himself’ or is ‘dependent upon finding employment in the business of others.”

Taken as a whole, the factors showed dependence on the company for finding business. As a result, the court determined that the summary judgment favoring Knight should be reversed and the class of technicians be allowed to continue their lawsuit to recover back wages and compensation.

For more information about the FLSA or if you believe you may have been denied all the compensation you are entitled to, contact the top Georgia wage and hour attorneys at Buckley Bala Wilson Mew LLP for an immediate case evaluation.