Scantland v. Jeffry Knight, Inc.

Scantland v. Jeffry Knight, Inc., 721 F.3d 1308 (11th Cir. 2013). For purposes of overtime and minimum wage protections afforded by the Fair Labor Standards Act ("FLSA"), workers may be considered "employees," rather than "independent contractors" when four of the six factors applied in determining whether an individual is an employee or independent contractor weigh strongly in favor of employee status. 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., an installation and repair service contractor for the cable company Bright House Networks in Florida. The technicians appealed the district court's order of summary judgment holding they were "independent contractors," not "employees." In determining whether an employer/ employee relationship exists for purposes of the FSLA, the United States Court of Appeals for the Eleventh Circuit looked to the "economic reality" of all the circumstances concerning whether the putative employee is economically dependent upon the alleged employer. See Aimable v. Long & Scott Farms, Inc., 20 F.3d 434, 439 (11th Cir. 1994) (applying the "economic reality" test to determine whether an employer/employee relationship exists for purposes of federal welfare legislation). In making this determination, the court, at the urging of both parties, applied a multifactor test to guide the "economic reality" inquiry, with the overarching focus on the economic dependence of the individual upon the business. See Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1311-12 (5th Cir. 1975). 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. The facts indicated that the employer exercised significant control over the technicians such that they did not stand as separate economic entities who were in business for themselves because the employer controlled what jobs technicians did, how much they were paid, how many hours they worked, how many days they worked, their daily work schedule, whether they could work for others, whether they could earn additional income from customers, and closely monitored the quality of their work. The second factor considers the alleged employee's opportunity for profit or loss depending upon his managerial skill. The facts indicated that technicians' opportunity for profit or loss depended more upon employer's provision of work orders and technicians' own technical skill and efficiency rather than their managerial skill because technicians' opportunity for profit was largely limited to their ability to complete more jobs than assigned, which was analogous to an employee's ability to take on overtime work or an efficient piece-rate worker's ability to produce more pieces. Thus, the second factor indicated economic dependence and therefore points strongly toward employee status. The third factor considers the alleged employee's investment in equipment or materials required for his task, or his employment of workers. This factor favored independent contractor status, although weakly, because while the employer provided the hardware that is actually installed in customers' homes and businesses, technicians were required to have vehicles, auto insurance, tools and safety equipment, and commercial general liability insurance. The fourth factor considers whether the service rendered requires a special skill. This factor also weakly supported a finding of independent contractor status. Technicians were clearly skilled workers, indicating that they were economically independent; however, this was undermined by the fact that the employer provided most technicians with their skills through training. The fifth factor considers the degree of permanency and duration of the working relationship. This factor pointed strongly toward employee status because the technicians worked for the employer for an average of more than five years with their contracts being for year terms, automatically renewed, and terminable only with thirty days notice. The sixth factor considers the extent to which the service rendered is an integral part of the alleged employer's business. This factor weighed strongly toward employee status because approximately two-thirds of the employer's business consists of telecommunications installation and repair services, relying on approximately five hundred technicians to perform such services. Thus, the court concluded that when viewing the facts most favorably towards plaintiffs, plaintiffs were "employees," not "independent contractors" under the FLSA and were thus entitled to overtime and minimum wage protections afforded by the FLSA. Therefore, the court reversed the district court's order of summary judgment and found that fact issues existed as to whether the technicians should be considered employees covered by FLSA. (Josh Becker)