Carrell v. Sunland Const., Inc.

• Decision Date: 25 August 1993
• Docket Number: No. 92-4948,92-4948
• Citation: 998 F.2d 330
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: , 126 Lab.Cas. P 33,005, 1 Wage & Hour Cas.2d (BNA) 993 Bennis CARRELL, et al., Plaintiffs-Appellants, v. SUNLAND CONSTRUCTION, INC., Defendant-Appellee.

Page 330

998 F.2d 330

62 USLW 2231, 126 Lab.Cas. P 33,005,

1 Wage & Hour Cas.2d (BNA) 993

Bennis CARRELL, et al., Plaintiffs-Appellants, v. SUNLAND CONSTRUCTION, INC., Defendant-Appellee.

No. 92-4948.

United States Court of Appeals, Fifth Circuit.

Aug. 25, 1993.

William Lurye, Gardner, Robein & Urann, Metairie, LA, Francis J. Martorana, Ellen O. Boardman, O'Donoghue & O'Donoghue, Washington, DC, for plaintiffs-appellants.

Greg Guidry, Steven C. Lanza, Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, Lafayette, LA, for defendant-appellee.

Appeal from the United States District Court for the Western District of Louisiana.

Before REAVLEY, DUHE and BARKSDALE, Circuit Judges.

REAVLEY, Circuit Judge:

Twenty welders sued Sunland Construction Inc. (Sunland), claiming that Sunland violated the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219, by failing to pay them overtime compensation. The district court dismissed the welders' lawsuit on the ground that they were not "employees" within the meaning of the FLSA. We affirm.

I. BACKGROUND

Sunland constructs transmission pipelines for natural gas companies. For each pipeline construction project, Sunland hires pipe welders and classifies them as independent contractors. The welders typically work 60 hours per week and are fully aware that Sunland considers them independent contractors. Twenty former welders (the Welders), who worked for Sunland at various times from 1987 to 1990, brought this action pursuant to section 16(b) of the FLSA. See 29 U.S.C. § 216(b). They claim that Sunland violated § 7(a)(1) of the FLSA by failing to pay them overtime compensation. See 29 U.S.C. § 207(a)(1) (requiring employers to pay employees at least 1.5 times the regular rate for hours worked in excess of 40 hours per week). The parties stipulated to many facts and filed cross-motions for summary judgment on the issue of employee status. The district court ruled that the Welders were independent contractors and not "employees" covered by the FLSA. Based on this ruling, the court dismissed the Welders' FLSA claims. The Welders appeal.

II. ANALYSIS

To determine employee status under the FLSA, we focus on whether the alleged employee, as a matter of economic reality, is economically dependent upon the business to which he renders his services. Brock v. Mr. W Fireworks, Inc., 814 F.2d 1042, 1043, 1054 (5th Cir.), cert. denied, 484 U.S. 924, 108 S.Ct. 286, 98 L.Ed.2d 246 (1987). Essentially, our task is to determine whether the individual is, as a matter of economic reality, in business for himself. Donovan v. Tehco, Inc., 642 F.2d 141, 143 (5th Cir.1981). To gauge the degree of the worker's dependency on the alleged employer, we consider five factors: the degree of control exercised by the alleged employer, the extent of the relative investments of the worker and alleged employer, the degree to which the worker's opportunity for profit and loss is determined by the alleged employer, the skill and initiative required to perform the job, and the permanency of the relationship. Mr. W Fireworks, 814 F.2d at 1043. These factors are merely aids in determining the question of dependency, and no single factor is determinative. Id. at 1054. We review de novo the district court's conclusion that the Welders were independent contractors. Id. at 1045. The parties have stipulated to the relevant facts underlying our determination.

a. Permanency of the relationship

During each of the years relevant to this lawsuit, none of the Welders worked exclusively for Sunland. To work consistently throughout the construction season, which lasts six to nine months, the Welders moved from job to job, company to company, and state to state. Sunland hired the Welders on a project-by-project basis, but made an effort to move the Welders to subsequent projects. The duration of Sunland's construction projects averaged six weeks, but some projects lasted only a few days. The average number of weeks that each Welder worked per year for Sunland varied from approximately 3 weeks to 16 weeks. ¹

b. Degree of control exercised by the alleged employer

The parties agree that pipe welding requires specialized skills and that Sunland had no control over the manner or method of the pipe welding. Instead, Sunland's customers dictated the specific welding procedures and the type of welding rods required for each construction project. Before each project, the gas company customer, not Sunland, tested and certified each Welder. Sunland was prohibited from participating in the test's administration. Each Welder placed his identification number on each weld so that the gas companies could determine who was responsible for any improper welds. Either the gas company or Sunland could unilaterally remove a Welder.

While working for Sunland, the Welders performed only pipe-welding work. Sunland assigned the Welders to specific welding work and maintained daily time records for each Welder. Sunland, however, did not specify the amount of time that a Welder could spend on an assignment. Sunland required the Welders to work the same days and hours as the remainder of Sunland's crew, including taking the same daily break periods.

c. Skill and initiative required

Pipe welding, unlike other types of welding, requires specialized skills. That the gas companies tested and certified each Welder before a job demonstrates the specialized nature of the work. As for the initiative required, a Welder's success depended on his ability to find consistent work by moving from job to job and from company to company. But once on a job, a Welder's initiative was limited to decisions regarding his welding equipment and the details of his welding work.

d. Relative investments of worker and alleged employer

The Welders supplied their own trucks, welding machines that were mounted on the trucks, and various other specialized welding tools (e.g., grinders, cutting torches, welding leads, welding hoods and gloves). The Welders' investment in their welding machines, trucks, and tools averaged $15,000 per Welder. The Welders also assumed all costs associated with operating, repairing, and maintaining their welding equipment. The Welders provided their own lodging and meals on all Sunland projects, including the out-of-town projects. Sunland maintained a policy requiring the Welders to provide their own general liability and workers' compensation insurance, but Sunland rarely enforced that policy.

Although Sunland generally did not supply any essential equipment or welding tools to its welders, it did supply blades for the grinders ² and some equipment to assist in cutting, supporting, and clamping pipes. Sunland also owned a "tack rig" which the Welders utilized in areas where they could not physically utilize their own rigs (approximately 1% of the time). Sunland employed "welder helpers" to assist the Welders, ³ and occasionally provided the necessary pipe jacks and welding rods. We further recognize that Sunland's overall investment in each pipeline construction project was obviously significant.

e. The degree to which the worker's opportunity for profit and loss is determined by the alleged employer

Sunland did not solicit bids or proposals from the Welders. It paid the Welders a fixed hourly rate of $23, plus $10 per day for rental of their grinders. Sunland intended approximately 40% of the $23 hourly rate to compensate the Welders...