Scantland v. Jeffry Knight, Inc.

• Decision Date: 16 July 2013
• Docket Number: No. 12–12614.,12–12614.
• Parties: Michael SCANTLAND, Daniel Lawrence, individually, and on behalf of all others similarly situated, et al., Plaintiffs–Appellants, v. JEFFRY KNIGHT, INC., d.b.a. Knight Enterprises, Jeffry D. Knight, Defendants–Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

721 F.3d 1308

Michael SCANTLAND, Daniel Lawrence, individually, and on behalf of all others similarly situated, et al., Plaintiffs–Appellants,

v.JEFFRY KNIGHT, INC., d.b.a. Knight Enterprises, Jeffry D. Knight, Defendants–Appellees.

No. 12–12614.

United States Court of Appeals,Eleventh Circuit.

July 16, 2013.

Harold L. Lichten, Shannon Liss–Riordan, Ian O. Russell, Lichten & Liss–Riordan, PC, Boston, MA, James A. Staack, Gray Cors, Staack, Simms & Hernandez, PA, Clearwater, FL, for Plaintiffs–Appellants.

Luis Antonio Cabassa, Steven G. Wenzel, Wenzel, Fenton, Cabassa, PA, Tampa, FL, for Defendants–Appellees.

Dean Romhilt, U.S. Dept. of Labor, Office of the Sol., Washington, DC, for U.S. Dept. of Labor, Amicus Curiae.

Kristi Lee Graunke, Southern Poverty Law Ctr., Atlanta, GA, for Interfaith Worker Justice, et al., Amici Curiae.

Appeal from the United States District Court for the Middle District of Florida.

Before CARNES, HULL and ANDERSON, Circuit Judges.

ANDERSON, Circuit Judge:

The plaintiffs in this conditionally certified collective action are current and former technicians who installed and repaired cable, internet, and digital phone services for defendant Jeffry Knight, Inc. (“Knight”), an installation and repair service contractor for the cable company Bright House Networks (“BHN”) in Florida. Plaintiffs appeal the district court's order on summary judgment holding that they were “independent contractors”—not “employees”—and therefore not entitled to overtime and minimum wage protections afforded by the Fair Labor Standards Act (“FLSA” or “Act”), 29 U.S.C. § 201 et seq. After careful review of the record, and with the benefit of oral argument, we conclude that the district court erred in this determination.

I. STANDARD OF REVIEW

This Court reviews an appeal from a summary judgment de novo and applies the same legal standards that control the district court. RJR Nabisco, Inc. v. United States, 955 F.2d 1457, 1459 (11th Cir.1992). Federal Rule of Civil Procedure 56(a) provides that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “The court must view all evidence most favorably toward the nonmoving party, and all justifiable inferences are to be drawn in the nonmoving party's favor.” Hoffman v. Allied Corp., 912 F.2d 1379, 1383 (11th Cir.1990).

A determination of employment status under the FLSA is a question of law reviewed de novo. Antenor v. D & S Farms, 88 F.3d 925, 929 (11th Cir.1996). The underlying facts and reasonable inferences therefrom are viewed in the light most favorable to plaintiffs, the non-moving party. Id.

II. THE FLSA

Congress passed the FLSA “to lessen, so far as seemed then practicable, the distribution in commerce of goods produced under subnormal labor conditions.” Rutherford Food Corp. v. McComb, 331 U.S. 722, 727, 67 S.Ct. 1473, 1475, 91 L.Ed. 1772 (1947). The FLSA's overtime and minimum wage protections were the “method chosen to free commerce from the interferences arising from production of goods under conditions that were detrimental to the health and well-being of workers.” Id. These protections, however, extend only to “employees,” a term given rough outline by a series of broad definitions in the Act. 29 U.S.C. §§ 206, 207. An “employee” is “any individual employed by an employer.” Id. § 203(e)(1). An “employer” “includes any person acting directly or indirectly in the interest of an employer in relation to an employee.” Id. § 203(d). The term “employ” “includes to suffer or permit to work.” Id. § 203(g).

These definitions are intended to be “comprehensive enough” to include “working relationships, which prior to this Act, were not deemed to fall within an employer-employee category.” Rutherford Food, 331 U.S. at 729, 67 S.Ct. at 1476 (quoting Walling v. Portland Terminal Co., 330 U.S. 148, 150–51, 67 S.Ct. 639, 640, 91 L.Ed. 809 (1947)). These “broad” definitions do not, however, bring “independent contractors” within the FLSA's ambit. See id. at 728–29, 67 S.Ct. at 1476.

To determine whether an individual falls into the category of covered “employee” or exempted “independent contractor,” courts look to the “economic reality” of the relationship between the alleged employee and alleged employer and whether that relationship demonstrates dependence. See Bartels v. Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1550, 91 L.Ed. 1947 (1947) ( “[E]mployees are those who as a matter of economic reality are dependent upon the business to which they render service”); Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33, 81 S.Ct. 933, 936, 6 L.Ed.2d 100 (1961) (referencing “ ‘economic reality’ rather than ‘technical concepts' ” as the “test of employment”); Aimable v. Long & Scott Farms, Inc., 20 F.3d 434, 439 (11th Cir.1994) (“To determine whether an employer/employee relationship exists for purposes of federal welfare legislation, we look ... to the ‘economic reality’ of all the circumstances concerning whether the putative employee is economically dependent upon the alleged employer.”). This inquiry is not governed by the “label” put on the relationship by the parties or the contract controlling that relationship, but rather focuses on whether “the work done, in its essence, follows the usual path of an employee.” Rutherford Food, 331 U.S. at 729, 67 S.Ct. at 1476. “[P]utting on an ‘independent contractor’ label does not take the worker from the protection of the Act.” Id.;see also Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1312 (5th Cir.1976) (“It is not significant how one ‘could have’ acted under the contract terms. The controlling economic realities are reflected by the way one actually acts.”).¹

Courts have applied various multifactor tests to guide the “economic reality” inquiry. Both parties in the instant appeal rely on the following six factors, which many courts have used as guides in applying the economic reality test:

(1) the nature and degree of the alleged employer's control as to the manner in which the work is to be performed;

(2) the alleged employee's opportunity for profit or loss depending upon his managerial skill;

(3) the alleged employee's investment in equipment or materials required for his task, or his employment of workers;

(4) whether the service rendered requires a special skill;

(5) the degree of permanency and duration of the working relationship;

(6) the extent to which the service rendered is an integral part of the alleged employer's business.²

While these factors serve as guides, the overarching focus of the inquiry is economic dependence:

No one of these considerations can become the final determinant, nor can the collective answers to all of the inquiries produce a resolution which submerges consideration of the dominant factor—economic dependence. The ... tests are aids—tools to be used to gauge the degree of dependence of alleged employees on the business with which they are connected. It is dependence that indicates employee status. Each test must be applied with that ultimate notion in mind. More importantly, 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, 527 F.2d at 1311–12 (emphasis in original) (citations omitted). Ultimately, in considering economic dependence, the court focuses on whether an individual is “in business for himself” or is “dependent upon finding employment in the business of others.” Mednick v. Albert Enters., Inc., 508 F.2d 297, 301–02 (5th Cir.1975).³

III. DISCUSSION

Because both parties apply the six-factor test set out above, and because we agree that those factors are relevant to determining whether an individual is an employee or independent contractor, we apply them here. We note, however, that these six factors are not exclusive and no single factor is dominant. We view the subsidiary facts relevant to each factor through the lens of “economic dependence” and whether they are more analogous to the “usual path” of an employee or an independent contractor. And of course, in the summary judgment posture of this case, we take reasonable inferences in favorof the plaintiffs in determining the facts underlying each factor in the analysis.

A. Control

The first factor considers the nature and degree of the alleged employer's control as to the manner in which the work is to be performed. “Control is only significant when it shows an individual exerts such a control over a meaningful part of the business that she stands as a separate economic entity.” Usery, 527 F.2d at 1312–13. The facts, viewed in the light most favorable to plaintiffs, indicate that Knight exercised significant control over plaintiffs such that they did not stand as “separate economic entities” who were “in business for themselves.”

Technicians were required to report to a Knight facility by 7:00 to 7:15 each morning. Technicians would turn in equipment from the previous day and submit their work orders, which included the billing codes that determined their pay for particular jobs. These billing codes were set by Knight, and managers could unilaterally change the codes that technicians reported, thereby reducing a technician's pay.⁴ Plaintiffs would also receive a “route” detailing the current day's work orders, which were generally assigned in two-hour timeslots. Though plaintiffs' “Independent Contractor Service Agreements” provided that they could “decline any work assignments,” plaintiffs testified that they could not reject a route or a work order within their route without threat of termination or being refused work in the following days. Thus, while a technician might consider a specific route or work order unprofitable, because, for example, it was...