Cable and Satellite installers are often categorized as “independent contractors” in the industry – a label that leads to a profound impact on their employment rights, including routine denial of overtime pay. Under the Fair Labor Standards Act, however, whether an installer is an employee entitled to overtime pay is determined not by any label used by the employer but rather the economic realities of the situation.
Even though courts have historically reserved the determination of employment status as a question of law for the Judge, the Sixth Circuit’s recent opinion in Keller v. Miri Microsystems LLC, is notable for coming down strongly on the side of sending the question to a jury when genuine questions of fact predominate. The appeals court reversed the lower court’s dismissal and returns the installer’s case to federal district court for trial. The Keller opinion builds on another important win for cable installers in 11th Circuit Opinion Scantland v. Jeffry Knight Inc., which also closely scrutinized the disputed facts in the economic realities test reversing summary judgment and cleared the way for cable installers to prove employment status and their right to overtime pay in front of a jury. The Keller and Scantland cases serve as strong reminder to the installer industry that “independent contractor” labels should not be abused to deny workers overtime pay. The cases could be part of an emerging trend distinguishing the cursory analysis in earlier installer decisions finding no employee status in other circuits.
There is no single factor to determine whether a worker is an employee entitled to overtime pay under the FLSA. In applying the economic realities test, courts generally look at six factors: 1) the permanency of the relationship between the parties; 2) the degree of skill required for the rendering of the services; 3) the worker’s investment in equipment or materials for the task; 4) the worker’s opportunity for profit or loss, depending upon his skill; 5) the degree of the alleged employer’s right to control the manner in which work is performed; and 6) whether the service rendered is an integral part of the alleged employer’s business. No one of these factors is dispositive; “rather, the test is based on a totality of the circumstances. The ultimate concern is whether, as a matter of economic reality, the workers depend on someone else’s business for the opportunity to render service or are in business for themselves.” The facts of each case are reviewed individually and one court’s determination regarding the legal status of installers is not necessarily binding on installers at another workplace.
As the Secretary of Labor recently observed: “the misclassification of employees as independent contractors cheats workers of wages and benefits to which they would otherwise be entitled to under the law, subsequently hurting our economy. It also leads to unfair competition because businesses that play by the rules operate at a disadvantage to those that don’t.”
For information or questions regarding this post and the rights of installers and other employees under the FLSA, readers can contact the author David Nacht. Blanchard leads Nacht Law’s wage and hour practice group, he is a litigator in overtime pay cases and independent contractor cases and a contributor at the upcoming FLSA conference for National Employment Lawyer’s Association, where he is speaking on the evolving definition of employee and the rights of “independent contractors” under the FLSA.