Halferty v. Pulse Drug Co., Inc.
| Decision Date | 13 July 1987 |
| Docket Number | No. 86-2466,86-2466 |
| Citation | 821 F.2d 261 |
| Parties | 28 Wage & Hour Cas. (BN 322, 107 Lab.Cas. P 34,935 Irma Ruth HALFERTY, Plaintiff-Appellee. v. PULSE DRUG COMPANY, INC., d/b/a Pulse Ambulance Service, Defendant-Appellant, |
| Court | U.S. Court of Appeals — Fifth Circuit |
Rehearing Granted. * Shelton E. Padgett, Kris J. Bird, Kaufman, Becker, Clare & Padgett, San Antonio, Tex., for defendant-appellant.
Gary Scarzafava, Judith A. Yacono, San Antonio, Tex., for plaintiff-appellee.
Appeal from the United States District Court for the Western District of Texas.
Before WILLIAMS and HILL, Circuit Judges, and MENTZ *, District Judge.
Pulse Drug Company (Pulse Drug) appeals the district court's judgment for Irma Ruth Halferty in her suit for minimum wage and overtime payments pursuant to the Fair Labor Standards Act (FLSA), 29 U.S.C. Secs. 201 et seq. We affirm in part and reverse in part and remand for further proceedings consistent with this opinion.
Pulse Drug is a family owned business that sells generic drugs to distributors. Pulse Drug also owns and operates Pulse Ambulance Service (Pulse Ambulance). Pulse Ambulance provides non-emergency transportation for disabled individuals, generally to and from their homes and their physicians or hospitals for routine treatment. In December 1981 Halferty began working for Pulse Ambulance as the company's night dispatcher. Halferty performed the job from her home, where she was "on duty" from 5:00 p.m. to 8:00 a.m. from Monday night to Thursday night, and from 5:00 p.m. Friday to 8:00 a.m. Monday. After a few months of being on duty 123 hours a week under this schedule, Halferty and Pulse Ambulance agreed to reduce her work schedule to 75 hours a week, 5:00 p.m. to 8:00 a.m., Monday night to Friday night. At the beginning of her employment, Halferty was compensated $2.50 per day, $1 per ambulance run, along with $2 per month as reimbursement for the call forwarding charges she incurred. After September 16, 1983, Halferty renegotiated her wages to a flat fee of $230 per month. The total wages received by Halferty during her employment from December 1981 to May 1984 were $5,665.60.
Halferty's duties began each workday at 5:00 p.m. when the daytime dispatcher at Pulse Ambulance would activate its call forwarding system, causing all incoming calls to Pulse Ambulance to ring only at Halferty's home. The call forwarding would remain activated until someone at Pulse Ambulance deactivated the system the next workday morning. When Halferty was hired, she was not given any special training; another Pulse Ambulance employee came to her house, explained the ambulance operations, and gave Halferty some log sheets. Halferty began work that evening.
Halferty's job responsibilities entailed being prepared to answer and answering the telephone. When an incoming caller requested ambulance service, Halferty was required to obtain the patient's name, location, destination, and method of payment. She was to note this information and the time of the call, assign the call to a particular ambulance crew, and notify that crew of the request. The ambulance crew, in turn, was required to keep Halferty informed of its progress and its whereabouts to aid her in assigning the next call.
Halferty also received calls requesting information about the ambulance service, as well as personal calls for Pulse Ambulance's owners, for the ambulance crews, and for other Pulse Ambulance employees. Between calls, Halferty was free to engage in any personal activities, so long as they did not interfere with her ability to respond to the phone. Thus, between calls she cleaned house, watched television, read, entertained friends, and slept. Halferty also pursued other independent business endeavors while at her home, including the raising of pedigree poodles, crocheting, baby-sitting, and laundering. Halferty was able to leave her home, but she was responsible for making sure that the phone would be answered by someone else, either at her home or at a third number to which she would have the calls forwarded.
Pulse Ambulance's parent company, Pulse Drug, treated Halferty as an employee on its financial and tax records. Halferty received W-2 forms listing Pulse Drug as her employer, and Pulse Drug listed Halferty on its reports to the Texas Employment Commission, the IRS, and the Social Security Administration. Pulse Drug withheld F.I.C.A. taxes on Halferty's behalf, and paid those amounts and the employer's matching amounts to the IRS. Pulse Drug's accountant pointed out to Mr. Martinez, Pulse Ambulance's owner, that Halferty was being treated as an employee on the company's books.
Halferty did not rely on her Pulse Ambulance employment as her main means of sustenance. Both before and after her period of employment with Pulse Ambulance, Halferty was almost completely dependent on aid from the federal government for her living expenses. As of September 1981 Halferty was receiving $643 per month in food stamps, AFDC payments, Lease Housing Program payments, and disability benefits to defray utility costs.
In early 1984 Halferty filed a complaint with the Wage and Hour Division of the Department of Labor (DOL). The DOL began an investigation relating to Halferty's wages. During this time Pulse Ambulance's owner requested that Halferty sign a statement verifying that she was an independent contractor. Halferty refused, and shortly thereafter, on May 21, 1984, Halferty was fired. Three days later the DOL informed Pulse Drug that it owed Halferty $28,128.75 in back wages. In November 1984 DOL informed Halferty that Pulse Drug refused to pay the back wages. On December 10, 1984, Halferty filed suit to recover her unpaid compensation.
In a bench trial the district court found that (1) Halferty was an employee within the meaning of the FLSA and therefore was entitled to minimum wage and overtime payments, (2) under the appropriate statute of limitations she was entitled to recover for two years of lost wages, and (3) she was entitled to recover reasonable attorney's fees for 200 hours at $100 per hour. 1 Judgment was entered in favor of Halferty in the amount of $27,336.03 and attorney's fees in the amount of $20,000.
Pulse Drug subsequently instituted this appeal, claiming error in each of the above findings and conclusions of the district court. Pulse Drug also contends that the district court did not properly apply the exception to the FLSA's minimum wage requirements for homeworkers, 29 C.F.R. Sec. 785.23, or the exception for time spent "waiting to be engaged."
The first issue we address is whether, under the FLSA, Halferty is an independent contractor or an employee. 2 The FLSA provides little guidance in making this determination. It defines "employee" as one "employed by an employer." 29 U.S.C. Sec. 203(e)(1). The definition of employer likewise sheds little light on the problem. "Employer" is defined as "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. Sec. 203(d). The FLSA, therefore, is of no help in deciding whether Halferty is an employee of Pulse Ambulance or merely an independent contractor.
The Supreme Court has provided some direction for distinguishing between employees and independent contractors. See Bartels v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947 (1947); United States v. Silk, 331 U.S. 704, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947); Rutherford Food Corp. v. McComb, 331 U.S. 722, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947). This circuit has adopted its framework for making the employee/independent contractor determination from those cases. Thus, we have often used a five part test established from Silk. This test includes examining (1) the degree of control exercised by the alleged employer; (2) the extent of the relative investments of the employee and employer; (3) the degree to which the employee's opportunity for profit and loss is determined by the employer; (4) the skill and initiative required in performing the job; and (5) the permanency of the relationship. See, e.g., Brock v. Mr. W Fireworks, Inc., 814 F.2d 1042, 1043 (5th Cir.1987). No one particular element, however, is necessarily determinative, see Castillo v. Givens, 704 F.2d 181, 190 (5th Cir.), cert. denied, 464 U.S. 850, 104 S.Ct. 160, 78 L.Ed.2d 147 (1983), nor are the five factors the only ones that the district court can consider. Mr. W Fireworks, 814 F.2d at 1043.
Moreover, the Silk factors should not be mechanically applied; rather, the court must use these factors as a guide to decide the ultimate issue of whether as a matter of "economic reality" a particular worker is an employee. See Weisel v. Singapore Joint Venture, Inc., 602 F.2d 1185, 1189 (5th Cir.1979). The "economic reality" of whether an employee/employer relationship exists for purposes of the FLSA turns on the "dependency" of the person upon the business for employment. Id. While applying the Silk test, then, the court must keep in mind the ultimate question of whether "the personnel are so dependent upon the business with which they are connected that they come within the protection of FLSA or are sufficiently independent to lie outside its ambit." Usery v. Pilgrim Equipment Company, Inc., 527 F.2d 1308, 1311 (5th Cir.), cert. denied, 429 U.S. 826, 97 S.Ct. 82, 50 L.Ed.2d 89 (1976). See also Castillo, 704 F.2d at 190 . 3
With these considerations in mind, we must examine the working relationship of the parties involved. Upon reviewing the record, we believe that the district court properly resolved this issue. 4
The first factor we examine is the degree of control over the putative employee exercised by the employer. Pulse Ambulance argues that this...
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