Silent Woman, Ltd. v. Donovan

• Decision Date: 30 April 1984
• Docket Number: No. 83-C-261.,83-C-261.
• Citation: 585 F. Supp. 447
• Parties: The SILENT WOMAN, LTD., Mary Joan Mollet, Georgette Vershure, Noreen J. Lipton, Mary Clement, Leona Keipe, Cynthia Mullowney, Annagene Schultz, Diane Krauss, Leah Kielmann, Sandra Acterberg, Plaintiffs, v. Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

585 F. Supp. 447

The SILENT WOMAN, LTD., Mary Joan Mollet, Georgette Vershure, Noreen J. Lipton, Mary Clement, Leona Keipe, Cynthia Mullowney, Annagene Schultz, Diane Krauss, Leah Kielmann, Sandra Acterberg, Plaintiffs, v. Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Defendant.

No. 83-C-261.

United States District Court, E.D. Wisconsin.

April 30, 1984.

Quarles & Brady by W. Stuart Parsons, Milwaukee, Wis., for plaintiffs.

Joseph P. Stadtmueller, U.S. Atty. by Jan E. Kearney, Asst. U.S. Atty., Milwaukee, Wis., for defendant.

DECISION AND ORDER

MYRON L. GORDON, Senior District Judge.

The plaintiffs brought this action for declaratory relief pursuant to 28 U.S.C. § 2201, seeking a declaration that their business relationship is not subject to the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201 et seq. Alternatively, the plaintiffs claim that the defendant's application of the FLSA to them constitutes a violation of due process. The defendant, who seeks to enforce the FLSA against the plaintiffs, has counterclaimed to recover backpay. This court's jurisdiction is based on 28 U.S.C. §§ 1331 and 1337(a). The parties have filed cross-motions for summary judgment on the issue whether the plaintiffs are covered by the FLSA and on the due process issue. The defendant's motion will be granted, the plaintiffs' denied.

FACTS

The parties have stipulated to the relevant facts. The corporate plaintiff, Silent Woman, is organized under the laws of Wisconsin and has its principal place of business in Ripon, Wisconsin. Silent Woman is engaged in the wholesale and retail sale of women's and children's outerwear. The firm operates retail shops in Ripon and in Boca Raton, Florida. Silent Woman has wholesale customers across the United States.

The nine individual plaintiffs are seamstresses who sew and embroider for Silent Woman in their homes. Since most of them have minor children, the women do needlework for Silent Woman only when their household duties allow. All nine of the women are accomplished seamstresses. They own their own sewing machines which cost an average of $700.00. Except for one woman who had been a factory seamstress, none of the women had sewn for money before working for Silent Woman, other than a relatively insignificant amount of work for neighbors, family or friends.

All of the seamstresses except one have sewn for Silent Woman since at least 1981. All have worked regularly on a part-time basis since their relationship with Silent Woman began, except on the few occasions when a seamstress was sick, or when there was not enough work. Since beginning to sew for Silent Woman, none of the seamstresses, with one exception, has attempted to find other customers. The one seamstress who has actively sought to expand her commercial activities began doing so after this suit was filed. In the 1981-mid-1983 period, none of the women had total earnings greater than $350.00 from non-Silent Woman sources. The women's total earnings from Silent Woman since 1981 ranged from $1,932.00 to about $15,000.00, with the seven in the middle all earning from $3,000.00 to $5,500.00.

Most of the seamstresses found work with Silent Woman through ads which the firm had placed in local newspapers. Silent Woman accepted applicants only after inspecting sample needlework. All qualified seamstresses were offered the same contract, drafted by Silent Woman. Although the contract is entitled "Employment Contract," the seamstresses are referred to as "independent contractors" throughout the text. Under the contract, seamstresses were permitted to sew professionally for others, but could not use designs created by Silent Woman for other work. The duration of the contract was to be indefinite, but either party could terminate on five days notice.

The terms of the seamstresses' compensation were also set out in the contract. Silent Woman paid according to piece rates which applied equally to all seamstresses. The piece rate was based loosely on the minimum wage. Each time it created a new article of clothing or design, Silent Woman asked one of four seamstresses to sew the garment and carefully record the total completion time. This time was multiplied by the minimum wage to yield the piece rate. Occasionally, Silent Woman has increased a piece rate based on a discussion with one or more of the seamstresses.

The seamstresses did not buy their cloth or other sewing materials. These were provided by Silent Woman in kits. The cloth was pre-cut for each garment. Specifications and designs, including applique designs, were provided, and Silent Woman reserved the right to reject any garment which did not strictly conform.

The seamstresses worked at home and set their own working hours. Silent Woman imposed no quotas or deadlines. The seamstresses could generally choose the garment they wished to sew. Silent Woman never inspected the seamstresses' homes or attempted to control the manner in which the work was done, insisting only that the finished product conform to specifications.

The defendant concluded from these facts that the seamstresses were Silent Woman's employees and, therefore, protected by the FLSA which applies to employers engaged in interstate commerce. 29 U.S.C. § 215; Dickenson v. United States, 353 F.2d 389 (9th Cir.), cert. denied 384 U.S. 908, 86 S.Ct. 1345, 16 L.Ed.2d 360 (1965). The defendant alleges that Silent Woman has violated the Act by failing to pay the seamstresses the minimum wage, contrary to 29 U.S.C. §§ 206 and 215(a)(2), and by failing to keep wage, hour and condition records, contrary to 29 U.S.C. §§ 211 and 215(a)(5). The plaintiff argues that the FLSA is inapplicable because the plaintiff seamstresses are not Silent Woman employees, but rather are independent contractors.

FAIR LABOR STANDARDS ACT

The FLSA definition of employ, "to suffer or permit to work," 29 U.S.C. § 203(g), is too broad to be useful in distinguishing an employee from an independent contractor. Where statutory definitions are inadequate, social welfare legislation is to be construed to achieve its purposes. United States v. Silk, 331 U.S. 704, 712, 67 S.Ct. 1463, 1467, 91 L.Ed. 1757 (1947); Usery v. Pilgrim, 527 F.2d 1308, 1309, 1311 n. 6 (5th Cir.1976). New Deal legislation such as the National Labor Relations Act, the Social Security Act and the Fair Labor Standards Act was intended to aid those whose ability to provide for themselves depended largely on forces beyond their control. Thus, the courts have defined "employee" in these Acts with the protected class in mind: "... In the application of social legislation, employees are those who as a matter of economic reality are dependent upon the business to which they render service." Bartels v. Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1549, 91 L.Ed. 1947 (1947); Accord, Goldberg v. Whitaker House Corp., 366 U.S. 28, 33, 81 S.Ct. 933, 936, 6 L.Ed.2d 100 (1961).

In Bartels and Silk, cases construing the Social Security Act, the Court listed five factors which might be useful in determining whether a worker is an employee or an independent contractor: (1) degree of control which the employer exercises over the manner in which the work is performed, (2) opportunities for profit or loss, (3) investment in facilities, (4) permanency or the relationship, and (5) skill required in the claimed independent operation. Silk, 331 U.S. at 716, 67 S.Ct. at 1469; Bartels, 332 U.S. at 130, 67 S.Ct. at 1549. As the Silk Court said of these factors, "No one is controlling nor is the list complete." Silk, 331 U.S. at 716, 67 S.Ct. at 1469. In Rutherford v. McComb, 331 U.S. 722, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947), a case construing the FLSA decided the same day as Silk, the Court emphasized that the determination of the relationship depends on "the circumstances of the whole activity." Rutherford, 331 U.S. at 730, 67 S.Ct. at 1477.

Because the parties have based their arguments on it and because it is a useful means of orientation, I shall consider the five-part test of Silk. This test will not, however, be allowed to obscure the ultimate test of the seamstresses' status, which involves the economic realities under all the circumstances.

The plaintiffs argue that the seamstresses' independent contractor status is strongly indicated by the fact that Silent Woman exercises no control over the manner in which the seamstresses perform their work. The seamstresses have complete freedom in setting their working hours and may use any needlework technique they choose. I agree with the plaintiff that this factor is in their favor, but I also believe that it cannot be accorded significant weight in light of the relevant case law.

While Silent Woman exercises no control over the seamstresses' manner of performance, the same can be said of almost all employers of homeworkers. Nevertheless, it is established that Congress intended the FLSA to apply to employees working at home. For a short period after enactment of the FLSA in 1938, the Department of Labor attempted to enforce the Act's child labor, overtime, and minimum wage provisions in the homework setting. When this proved to be difficult, the Department conducted a study and determined that evasion of the FLSA by employers of homeworkers was so simple and widespread that enforcement was impractical. Wage & Hour Div., Dept. of Labor, Findings and Opinion of the Administrator 13 (1942), reprinted in I Joint Appendix 79. In 1943, the Department banned homework in certain industries, including the women's outerwear industry. In Gemsco, Inc. v. Walling, 324 U.S. 244, 65 S.Ct. 605, 89 L.Ed. 921 (1945), the Supreme Court upheld the ban as a proper exercise of the Department's authority to enforce the FLSA.

As the Gemsco Court noted, homeworkers "generally are part-time pieceworkers." 324 U.S. at 252, 65 S.Ct. at 611. It is in the nature of homework that the workers set their hours and work unsupervised, yet ...