Robicheaux v. Radcliff Material, Inc., No. 81-3578

• Citation: 697 F.2d 662
• Decision Date: 07 February 1983
• Docket Number: No. 81-3578
• Parties: 25 Wage & Hour Cas. (BN 1210, 96 Lab.Cas. P 34,329 Billy ROBICHEAUX, et al., Plaintiffs-Appellees, v. RADCLIFF MATERIAL, INC., a subsidiary of Southern Industries Corporation, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 662

697 F.2d 662

25 Wage & Hour Cas. (BN 1210, 96 Lab.Cas. P 34,329

Billy ROBICHEAUX, et al., Plaintiffs-Appellees, v. RADCLIFF MATERIAL, INC., a subsidiary of Southern Industries Corporation, Defendant-Appellant.

No. 81-3578.

United States Court of Appeals, Fifth Circuit.

Feb. 7, 1983.

Kullman, Lang, Inman & Bee, James D. Carriere, New Orleans, La., for defendant-appellant.

Conery & Breaux, John E. Conery, Franklin, La., for plaintiffs-appellees.

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

Before WISDOM, RANDALL and TATE, Circuit Judges.

TATE, Circuit Judge:

The plaintiffs, five Louisiana welders, bring suit in federal court, 29 U.S.C. Sec. 216(b), to recover unpaid overtime wages and liquidated damages under the Fair Labor Standards Act of 1938, 29 U.S.C. Sec. 201 et seq. Made defendant is their alleged employer ("Radcliff"), who principally contends that the welders are independent contractors, rather than "employees" covered by the Act. The district court found the plaintiff welders to have been employees within the meaning of the Act and thus entitled to overtime compensation for work performed for Radcliff in excess of forty hours in any week, section 207 of the Act, 29 U.S.C. Sec. 207. ¹ The court rejected, however, their claim for statutory liquidated damages in an additional amount equal to the unpaid overtime wages, section 216(b), 29 U.S.C. Sec. 216(b), ² in purported exercise of its discretion not to do so when the employer is found to be in good faith, section 260, 29 U.S.C. Sec. 260. ³ The court also awarded the plaintiffs' attorney's fees.

Radcliff appeals, contesting only the finding of employee status. The welders also request appellate relief. Without having filed a cross-appeal, the plaintiff welders argue in brief and orally for reversal of the denial of liquidated damages. Finding no error in the district court's determination that the welders were employees rather than independent contractors, because of Radcliff's economic control over their work functions and their resultant economic dependence upon Radcliff under the circumstances here shown, and finding that the issue of liquidated damages is not properly before us, we affirm, supplementing the award by allowing attorney's fees and costs on appeal.

Facts

The facts relevant to a disposition of this case are essentially undisputed. For a period of time ranging from ten months to three years, each of the plaintiff welders in this case worked for Radcliff. They each signed contract with the company describing themselves to be independent contractors, furnished their own welding equipment (in which they had invested from five to seven thousand dollars), and provided their own insurance and workmen's compensation coverage. In addition, they invoiced Radcliff (for hours worked) on their own business letterheads, filed federal income tax returns on IRS forms as self-employed individuals, and received a higher hourly wage than did other welders employed by Radcliff who did not furnish their own equipment and who were considered by the company to be employees.

Prior to working exclusively for Radcliff, the welders had held themselves out to be independent contractors, some with their own business cards, advertising, company names, and letterheads.

Despite these factors, however, indicating some degree of independence and control, the welders were expected by Radcliff to arrive at work each morning at 7:00 a.m. and work at least until 5:00 p.m. They were given daily work assignments by Radcliff personnel, were told what to work on, where, and how long an assignment should take. They were supervised by Radcliff personnel periodically during the course of the day. Of the work done, the district court found that only 50% was welding work, with the remainder being clean-up work and other semi-skilled mechanical work. One plaintiff testified that, of the welding work, only 30% was performed with the welders' own machines, the remainder being performed with Radcliff equipment. The welders were on 24-hour call, and generally worked 50 to 80 hours per week. Except for insignificant occasions, all work during the ten month to three year period was done for Radcliff. One welder testified, for example, that if he did not appear at the prescribed time in the morning, he knew he would lose his job.

In 1980, Radcliff asked the welders to procure additional insurance. Upon their refusal, the work relationship was terminated. Radcliff now appeals the district court's determination that the welders were employees within the meaning of the Act, and the court's consequent award of accrued overtime wages, attorney's fees and costs.

"Employee" Status and Standard of Review

The Act defines an "employee" simply as "any individual employed by an employer", section 203(e)(1), 33 U.S.C. Sec. 203(e)(1); and to "employ" as including "to suffer or permit to work", section 203(g), 33 U.S.C. Sec. 203(g). The term "employee" is thus used "in the broadest sense 'ever ... included in any act.' " Donovan v. American Airlines, Inc., 686 F.2d 267, 271 (5th Cir.1982). Various jurisprudential tests have evolved, the focus of which is whether the employees, "as a matter of economic reality, are dependent upon the business to which they render service." Mednick v. Albert Enterprises, Inc., 508 F.2d 297, 299 (5th Cir.1975), quoting Bartels v. Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1550, 91 L.Ed. 1947 (1947).

When there are indicia of the employee's economic independence of the employer, the determination of employee status is not always an easy one to make and will rest on an analysis of the evidence as a whole as to whether the claimant as a matter of economic reality is dependent for his livelihood upon his relationship with his alleged employer. Hickey v. Arkla Industries, Inc., 688 F.2d 1009, 1012-13 (5th Cir.1982). In this regard, common law concepts of "employee" and "independent contractor" have been specifically rejected by the courts, ⁴ and five considerations are generally used in gauging the degree of economic dependence of an alleged employee: the skill required; the permanency of the relationship; the employee's investment in facilities; the employer's degree of control; and the degree to which the opportunity for profit or loss is determined by the employer. Usery v. Pilgrim Equipment Co., Inc., 527 F.2d 1308, 1311 (5th Cir.) cert. denied, sub nom. Pilgrim Equipment Company, Inc. v. Usery, 429 U.S. 826, 97 S.Ct. 82, 50 L.Ed.2d 89 (1976). No one of these tests is controlling, but

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 FLSA or are sufficiently independent to lie outside its ambit.

Usery, supra, 527 F.2d at 1311-12. Stated another way, "[t]he focal inquiry in the characterization process is thus whether the individual is or is not, as a matter of economic reality, in business for himself." Donovan v. Tehco, Inc., 642 F.2d 141, 143 (5th Cir.1981).

We review the district court's determination as being one of mixed law and fact. Donovan, supra, 686 F.2d at 270 note 4. As to the trial court's underlying factual findings and factual inferences deduced therefrom, we are bound by the clearly erroneous standard of Rule 52(a) of the Federal Rules of Civil Procedure. Id. However, as to the legal conclusion reached by the district court based upon this factual data, i.e., here that these welders are employees rather than independent contractors, we may review this as an issue of law. Id.

Employee Status Was Correctly Determined

We conclude, on the basis of the non-clearly erroneous factual findings of the district court, that these welders were correctly determined to be employees within the meaning of the Act. Looking at the "economic realities" of the relationship in light of the factors listed above, it is apparent that the welders were economically dependent on Radcliff.

Radcliff exercised substantial if not complete control over the hours worked and the jobs done by the welders. The duration of the relationship was from ten months to three years for each of them--a substantial period of time--and except for insignificant work elsewhere, was exclusively with Radcliff. The skill required for welding was determined by the district court to be "moderate," and much of the work done was less-skilled non-welding-related work. Although each of the welders had invested his own money in purchasing a welding machine, the district court concluded that a relatively minor portion of the compensation was paid to the employees based upon their furnishing their equipment and that the major part of the compensation was paid for the services of these reliable, always on call, experienced employees. The district court also found that any opportunity for profit was determined solely by Radcliff's need for their work (rather than, for instance, on the initiative and planning of the individual welders.) Cf. Hickey v. Arkla Industries, Inc., supra, 688 F.2d 1009 (manufacturer's sales representative whose income was in the form of commissions rather than wages, and whose opportunity for profit depended on initiative and planning, is not an "employee"); see also Usery v. Pilgrim Equipment Co., Inc., supra, 527 F.2d at 1314.

The plaintiff welders in this case did receive higher hourly wages than did the Radcliff welders who did not furnish their welding equipment and who were considered by Radcliff to be employees. However, a fair inference from the record is that, as some of even Radcliff's witnesses testified, the higher pay to these "contract" welders resulted from their higher degree of skill, the greater number of hours worked per week, and their more onerous 24-hour on-call duty.

An employee is not permitted to waive employee status. Donovan v. American...