Herr v. Heiman, s. 94-3411

• Decision Date: 09 February 1996
• Docket Number: 94-3421,Nos. 94-3411,s. 94-3411
• Citation: 75 F.3d 1509
• Parties: 131 Lab.Cas. P 33,334, 3 Wage & Hour Cas.2d (BNA) 171 Samuel E. HERR, an individual, Plaintiff-Counter-Defendant-Appellee and Counter-Appellant, v. James L. HEIMAN, an individual, Defendant, and McCormick Grain--the Heiman Company, Inc., a Kansas corporation, Defendant-Counter-Claimant-Appellant and Counter-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1509

75 F.3d 1509

131 Lab.Cas. P 33,334, 3 Wage & Hour Cas.2d

(BNA) 171

Samuel E. HERR, an individual Plaintiff-Counter-Defendant-Appellee and Counter-Appellant, v. James L. HEIMAN, an individual, Defendant and McCormick Grain--the Heiman Company, Inc., a Kansas corporation, Defendant-Counter-Claimant-Appellant and Counter-Appellee.

Nos. 94-3411, 94-3421.

United States Court of Appeals Tenth Circuit.

Feb. 9, 1996.

On appeal from the United States District Court for the District of Kansas (D.C. No. 92-1321-PFK).

Robert D. Overman of Martin, Churchill, Overman, Hill & Cole, Chartered, Wichita, Kansas, for Plaintiff-Appellee and Counter-Appellant.

H. Douglas Pfalzgraf (Edward L. Keeley of Rupe & Girard Law Offices, P.A., Wichita, Kansas, with him on the briefs) of Pfalzgraf Law Offices, Wellington, Kansas, for Defendants-Appellants and Counter-Appellees.

Before MOORE, BRORBY and KELLY, Circuit Judges.

BRORBY, Circuit Judge.

Samuel E. Herr brought suit against McCormick Grain--The Heiman Company, Inc. (hereinafter "McCormick") and James L. Heiman for violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., the Kansas Wage Payment Act, K.S.A. 44-313 et seq., and sought cancelation of three promissory notes upon which McCormick later counterclaimed. The district court granted Mr. Herr judgment pursuant to Fed.R.Civ.P. 50 on his non-wilful Kansas Wage Payment Act claims, the defined benefit portion of his Employee Retirement Income Security Act claims, and for certain attorney's fees and expenses. The district court also granted Mr. Herr summary judgment on the issue that he was an employee of McCormick and not an independent contractor. The district court granted McCormick summary judgment on Mr. Herr's claim for pension benefits under McCormick's money purchase pension plan, granted Mr. Heiman's motion for summary judgment to be dismissed from the lawsuit, and granted McCormick's Rule 50 motions holding that Mr. Herr was an administrative employee and that McCormick's violations of the Kansas Wage Payment Act were not wilful. Both parties appeal. We exercise jurisdiction pursuant to 28 U.S.C. § 1291.

McCormick appeals on four grounds, claiming the trial court: 1) erred in finding Mr. Herr was an employee rather than an independent contractor at the summary judgment stage of the proceeding; 2) erred in finding it had subject matter jurisdiction over Mr. Herr's Employee Retirement Income Security Act claims in light of 29 U.S.C. § 1132(e); 3) erred in entering Fed.R.Civ.P. 50 judgments for plaintiff on his non-wilful Kansas Wage Payment Act claims and against McCormick on its promissory note counterclaims; and 4) abused its discretion in awarding Mr. Herr attorney's fees and expenses as to his Employment Retirement Income Security Act claim.

Mr. Herr cross-appeals on four issues, claiming the trial court: 1) erred in finding Mr. Herr was, pursuant to the Employment Retirement Income Security Act, not entitled to benefits under the money purchase plan; 2) erred in finding Mr. Herr an exempt employee under the Fair Labor Standards Act and not entitled to minimum wage, overtime compensation and attorney's fees and costs; 3) erred in finding Mr. Heiman has no personal liability for violations of the Fair Labor Standards Act; and 4) erred in finding McCormick's violations of the Kansas Wage Payment Act were not wilful.

Mr. Herr worked as a grain merchandiser with McCormick from 1979 through 1991. As a grain merchandiser he would arrange to buy, sell and ship grain to customers. All of this was done from a room at McCormick's offices where the grain merchandisers sat with their desks in a rectangular formation. When one merchandiser found a customer who wanted to buy or sell grain he would announce it to the room and another merchandiser would try to find another buyer or seller to complete the transaction. Mr. Herr was paid an eighteen percent, later raised to twenty percent, commission as compensation. Mr. Herr never received any pension, employment or vacation benefits from McCormick. He filed suit to be compensated for the benefits he feels he was denied due to McCormick's wrongfully classifying him as an independent contractor rather than as an employee.

I

First, McCormick alleges the trial court erred in its finding that Mr. Herr was an employee rather than an independent contractor at the summary judgment stage of the proceeding. We review a grant of summary judgment de novo. Coosewoon v. Meridian Oil Co., 25 F.3d 920, 929 (10th Cir.1994). "Summary judgment is appropriate when there is no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law." Russillo v. Scarborough, 935 F.2d 1167, 1170 (10th Cir.1991). We must review the record in the light most favorable to the non-moving party. Meredith v. Beech Aircraft Corp., 18 F.3d 890, 893 (10th Cir.1994).

Because Mr. Herr brought charges under three separate statutes it is necessary to determine whether he qualifies as an employee or an independent contractor under each one.

In Dole v. Snell, 875 F.2d 802 (10th Cir.1989), we identified the five factors courts generally use to determine whether a person is an employee or an independent contractor under the Fair Labor Standards Act as: 1) the degree of control exerted by the alleged employer over the worker; 2) the worker's opportunity for profit or loss; 3) the worker's investment in the business; 4) the permanence of the working relationship; and 5) the degree of skill required to perform the work. Id. at 805. In Dole, we also noted "the extent to which the work is an integral part of the alleged employer's business" is another factor to consider. Id. None of the factors alone is dispositive but rather we employ a totality-of-the-circumstances approach. Rutherford Food Corp. v. McComb, 331 U.S. 722, 730, 67 S.Ct. 1473, 1476-77, 91 L.Ed. 1772 (1947).

The Kansas Wage Employment Act defines an employee as "any person allowed or permitted to work by an employer." K.S.A. § 44-313(b). The Kansas Supreme Court has recognized "[t]here [is] no absolute rule for determining whether an individual is an independent contractor or an employee. It is the facts and circumstances in each case that determine [the status of the individual]." Wallis v. Secretary of Kan. Dept. of Human Resources, 236 Kan. 97, 689 P.2d 787, 792 (1984). In Crawford v. Department of Human Resources, 17 Kan.App.2d 707, 845 P.2d 703 (1989), the court listed twenty factors used by the state Department of Human Resources to determine whether an employee-employer relationship exists. These factors include:

1) the existence of the right of the employer to require compliance with instructions;

2) the extent of any training provided by the employer;

3) the degree of integration of the worker's services into the business of the employer;

4) the requirement that the services be provided personally by the worker;

5) the existence of hiring, supervision, and paying of assistants by the workers;

6) the existence of a continuing relationship between the worker and the employer;

7) the degree of establishment of set work hours;

8) the requirement of full-time work;

9) the degree of performance of work on the employer's premises;

10) the degree to which the employer sets the order and sequence of work;

11) the necessity of oral or written reports;

12) whether payment is by the hour, day or job;

13) the extent to which the employer pays business or travel expenses of the worker;

14) the degree to which the employer furnishes tools, equipment, and material;

15) the incurrence of significant investment by the worker;

16) the ability of the worker to incur a profit or loss;

17) whether the worker can work for more than one firm at a time;

18) whether the services of the worker are made available to the general public;

19) whether the employer has the right to discharge the worker; and

20) whether the employer has the right to terminate the worker.

Id. 845 P.2d at 706. The above factors are to be considered as a whole with a particular emphasis placed on the employer's right to control the worker. Id.

The Employee Retirement Income Security Act defines an employee as "any individual employed by an employer." 29 U.S.C. § 1002(6). The Supreme Court has held that traditional agency criteria should be used to determine whether a worker qualifies as an employee. Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 319, 112 S.Ct 1344, 1346, 117 L.Ed.2d 581 (1992). Specifically the court adopted a common-law test that considers the hiring party's right to control the manner and means by which the product is accomplished. The factors relevant to this inquiry are: 1) the skill required; 2) the source of the instrumentalities and tools; 3) the location of the work; 4) the duration of the relationship between the parties; 5) whether the hiring party has the right to assign additional projects to the hired party; 6) the extent of the hired party's discretion over when and how long to work; 7) the method of payment; 8) the hired party's role in hiring and paying assistants; 9) whether the work is part of the regular business of the hiring party; 10) whether the hiring party is in business; 11) the provision of employee benefits; and 12) the tax treatment of the hired party. Id. at 323-24, 112 S.Ct. at 1348-49. Under this test no single factor is decisive; the overall relationship between the parties must be assessed and weighed. NLRB v. United Ins. Co. of America, 390 U.S. 254, 258, 88 S.Ct. 988, 990-91, 19 L.Ed.2d 1083 (1968).

The district court applied the above factors and evaluated the controverted and uncontroverted facts before ruling "[t]here is ample evidence to find Herr was an employee of McCormick Grain." Whether an individual is an employee or an independent contractor is generally a question of fact for the jury to...