Walling v. American Needlecrafts

• Decision Date: 30 November 1943
• Docket Number: No. 9455.,9455.
• Parties: WALLING, Adm'r of Wage and Hour Division, U. S. Dept. of Labor, v. AMERICAN NEEDLECRAFTS, Inc.
• Court: U.S. Court of Appeals — Sixth Circuit

139 F.2d 60 (1943)

WALLING, Adm'r of Wage and Hour Division, U. S. Dept. of Labor, v. AMERICAN NEEDLECRAFTS, Inc.

No. 9455.

Circuit Court of Appeals, Sixth Circuit.

November 30, 1943.

Morton Liftin, of Washington, D. C. (Douglas B. Maggs and Bessie Margolin, both of Washington, D. C., Jeter S. Ray, of Nashville, Tenn., and Mortin Liftin and Faye Blackburn, both of Washington, D. C., on the brief), for appellant.

Allen P. Dodd, of Louisville, Ky. (J. R. Layman, of Elizabethtown, Ky., and Allen P. Dodd, of Louisville, Ky., on the brief), for appellee.

Before SIMONS, MARTIN, and McALLISTER, Circuit Judges.

SIMONS, Circuit Judge.

The appellant, Administrator of the Wage and Hour Division of the United States Department of Labor, challenges the decision below in a trial to the court without a jury (46 F.Supp. 16), which, on the principal issue here involved, held certain needleworkers in Kentucky, engaged in processing materials furnished by the appellee and compensated therefor on a piece basis, to be independent contractors and so not subject to the provisions of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq., which deal with minimum wages, maximum hours, and the keeping of records. Other parties, engaged in activities similar to those of the appellee, intervened in the District Court, praying that their status likewise be adjudicated in the action. A judgment dismissing the appellant's petition was ordered but jurisdiction was retained for the entry of such orders and judgments as may become necessary to dispose of the rights of the intervenors.

As found by the District Judge, the appellee is a New York Corporation, having branch offices or studios in Kentucky, employing there directly some 40 persons and dealing with approximately 500 others who are, for descriptive purposes, referred to as homeworkers. These persons are engaged in appliqueing, quilting, and other needlework performed on comforters, bedspreads, pillow slips, robes, housecoats, and articles of kindred nature, which are manufactured and, after processing, are sold by the appellee in interstate commerce. The material used in manufacturing the products is purchased in New York and sent to the Kentucky studios, for the most part already cut and stamped with the design for the required needlework. It is then delivered by the studios, in convenient bundles, to the homeworker, and when returned and accepted as satisfactory, is either shipped to the New York office or directly to customers.

The appellee secures its homeworkers through local newspaper advertising, personal solicitation, and through the homeworkers themselves. The work upon which these persons are engaged is skilled, and it is claimed that ability to perform it is present nowhere except in certain counties of Kentucky. The persons possessing such skill are women living in the rural districts of such counties, and consist almost entirely of wives, widows, and daughters of farmers, their craftsmanship passing generally from one generation to another. The native art is, however, in some instances, supplemented by instruction on the part of the appellee, either in the studio or the home, such instruction supplementing in detail the basic skill already possessed. Homeworkers are required to prove their qualifications before work is entrusted to them.

Material which is distributed for appliqueing, bears upon it a stamped pattern, and monogramming is done from a paper model. Instructions as to kind or color of thread are given to the worker when the arrangement is entered into, and the worker is required to comply strictly with the pattern and specifications so furnished. During performance there is no supervision or inspection of the work, the studio looking exclusively to the finished article in determining whether it has been satisfactorily processed. The date on which the work is to be performed is sometimes entered on a ticket accompanying the material, and at other times indicated to the worker orally. So with the amount of compensation. It also is entered on the ticket in some instances, and in others is stated to the worker upon the return and inspection of product. When new designs are adopted compensation is sometimes the result of discussion and agreement with consideration given to the skill, effort, and time involved in previous work on comparable articles. There is no obligation on the part of the homeworker to undertake any work, and no discrimination practiced against one who declines to take particular kinds of work, or who discontinues work at any time. The workers are entirely free agents in respect to the amount of time put upon the work from day to day, being limited in that respect only by the date set for completion and return. In seasons of the year when work on the farm is heavy, little time is available and little work undertaken. It is generally done at odd times as farm duties and housework permit. The simple equipment necessary to performance, consisting of a frame and clamps, needles, thimbles, and wooden horses, are provided by the worker at her own expense.

It frequently happens that the person to whom the work is issued and charged, will turn it over to other members of the family or to neighbors, and sometimes she will do but a part and let others do the rest. In some instances one person will come to the studio and receive, in her own name, bundles for both herself and neighbors. The studio keeps a record only of those who receive the material and such persons are paid for the completed work when it is delivered. The studio reserves the right to inspect the completed article upon its return, and to reject it and decline to pay for the work if not satisfactorily done according to pattern and specifications. There is no restriction against persons working both for the appellee and its competitors during the same period of time, and in instances workers have done so. Occasionally the appellee has rush orders which require delivery at a date earlier than usual. Some workers accept such rush orders which require long hours of work per day, but they are not required to do so nor are they discriminated against because of refusal.

Work is paid for on a piece basis when it is returned to the studio. The appellee is not advised as to the time given to the completion of any piece of work, and keeps no record thereof. In most instances the worker herself keeps no record, and some consider the activity merely a pastime from which additional income may be obtained to supplement farm income. A few, however, devote practically all their time to it and consider it regular employment from which they earn their living. In cases where data has been kept, workers have earned an average of 8 to 15 cents an hour, and in some instances as little as 50 cents for a day of 8 to 10 hours, the rate of compensation varying by reason of differences in skill, physical ability, and effort expended.

It is conceded that the persons engaged in the activities thus described are in commerce or engaged in the production of goods for commerce, and that the appellee, in respect to the homeworkers, did not comply with the provisions of §§ 6, 7, or 11 (c) of the Act in that it failed to pay the designated minimum wage, to comply with limitations upon hours, or to keep records in respect to wages or hours. The defense was that the homeworkers are not employees as defined by the Act, but are independent contractors and so not covered. The Administrator contended that the homeworkers are not only employees but that even if classed as independent contractors under the common law are yet within the protection of the Act.

The court, basing its reasoning upon the lack of supervisory control over the manner in which, or the time when the work was to be done by the homeworkers, and the absence of power reserved or exercised by the appellee to terminate...