Decision Favors Employers
Workers alleged they were misclassified as independent contractors and not properly paid overtime under Fair Labor Standards Act (FLSA). The employer defendant had both employees and independent contractors serving in the same position. With this backdrop, the Fifth Circuit addressed the thorny employer quandary regarding how much they may supervise and impose their policies upon independent contractors without changing their employment status. The court held the degree, (1) of control exercised by the employer and (2) to which a workers' opportunity for profit or loss was determined by the employer favored independent contractor status. Also putting the workers in the independent contractor bucket was the skill and initiative required in performing the workers' job and the permanency of the relationship between workers and the employer. The only factor favoring employee status was the relative investments of workers and employer. The court emphasized when evaluating independent contractor status it is not what plaintiffs could have done that counts, but as a matter of economic reality what they actually do that is dispositive. The controlling economic realities are reflected by the way one actually acts.