Employers and individuals often seek to call their relationship contractor/independent contractor — not employer/employee. Courts are increasingly resistant to such artificial designations. The Federal Court in Maryland, in a lawsuit claiming overtime pay under the Fair Labor Standards Act, ruled on January 18, 2012 that independent contractor status did not apply to an installer of doors, windows, and siding. In the case of Calle v. Or, Judge Chasanow analyzed the work of an installer who worked approximately 66 hours per week, was regularly supervised by the Employer, and although he brought his own tool belt to work, the Employer provided all large tools and scaffolding necessary to complete the assignments.
The Court used the following six factor test in determining the “Economic Reality” of the parties rather than what the parties called each other, or upon the installer’s classification as an independent contractor for tax purposes:
- Degree of control exercised over the matter in which work is performed – The Employer picked up the installer each morning and drove him to job sites, instructed him regarding the work that he needed to perform that day, and set his work hours.
- Opportunities for profit or loss – The installer did not undertake risk of profit and loss usually associated with an independent business. He was paid a fixed rate for each day and he could not increase profits by obtaining additional work.
- Investment in equipment and employment of others – The installer did not employ any other workers, and provided only his tool belt, with the Employer purchasing all other necessary tools, which were more substantial.
- Degree of skill required on the job – the Court acknowledged that this factor may weigh in the Employer’s factor since courts previously found that skills employed by construction workers indicate that many are independent contractors. But, because no single factor is dispositive in determining employment status, this factor alone does not satisfy the independent contractor test.
- Working exclusively for Employer for an extended time period – the relative permanence of the working relationship here supported a finding that the installer is an employee where he worked full time and exclusively for the Employer for over three years between 2008 and 2011.
- Whether the work performed is integral to the Employer’s business – the installation of doors, windows, and sidings was a critical component of the Employer’s residential construction business.
In summary, five of the six “economic reality” factors indicated that the installer was an employee, not an independent contractor. The take away is that employers should be aware that plaintiffs’ counsel and governmental agencies have been aggressive lately in challenging the misclassification of purported independent contractors.