Riggan Law Firm Headed to Trial in FLSA Action

On May 20, 2014, the United States District Court for the Eastern District of Missouri denied the parties cross motions for summary judgment in the case Pennington, et al. v. Integrity Communications, Inc. The plaintiffs—represented by Riggan Law Firm, LLC and The Law Offices of Kevin J. Dolley—filed a lawsuit against Integrity to recover unpaid wages, and other relief, for violations of the federal Fair Labor Standards Act ("FLSA") and the Employee Retirement Income Security Act ("ERISA"). The FLSA establishes a federal minimum wage of $7.30 per hour and requires a minimum of "time-and-a-half" for hours worked over forty per workweek. But those protections extend only to covered employers and employees – not independent contractors.

In this case, the plaintiffs worked as cable installers for Integrity. Integrity classified the plaintiffs as independent contractors, paying them on a piecemeal basis for each completed job. The plaintiffs alleged they were, in fact, employees of Integrity, such that they were entitled to the wage/hour protections of the FLSA and entitled to employee benefits pursuant to ERISA. In support of that contention, the plaintiffs alleged that: they wore shirts containing Integrity's logo; they presented themselves as Integrity's employees; Integrity supplied their work tools; Integrity controlled when the plaintiffs reported to scheduled jobs, where to report, when the workday ended, and how to perform necessary services; among other things.

In the Complaint, the plaintiffs contend that Integrity violated the FLSA by failing to pay them overtime compensation and reimbursement for travel expenses, and by failing to provide them with benefits. Integrity previously filed a motion for summary judgment claiming that the plaintiffs were independent contractors, and thus not entitled to protection under the FLSA. Likewise, the plaintiffs filed their own summary judgment motion, arguing that plaintiffs are employees as a matter of law. The court denied both motions. In doing so, the court made clear that the independent contractor-employee dichotomy is resolved by examining the "economic reality" of the working relationship – that is, whether the individual seeking relief is in business for herself or is dependent upon finding employment in the business of others. As such, courts consider several factors of the working relationship: (1) the nature and degree of the employer's control over the manner in which the work is performed; (2) the individual's opportunity for profit or loss; (3) the individual's investment in equipment or materials required to perform the job; (4) whether the service rendered requires special skills; (5) the degree of permanency and duration of the working relationship; and (6) the extent to which the service rendered is an integral part of the employer's business.

The court denied both motions on the basis that there are sufficient factual disputes, which need to be resolved by a jury. First, the court noted the existence of dispute facts as to the control – or lack thereof – over the plaintiffs' work. Specifically, the plaintiffs contended Integrity controlled the manner in which plaintiffs performed the work and where and how much the plaintiffs worked. In contrast, Integrity contended it had no requirements for how installers completed jobs and did not supervise the work of installers. Second, the court noted the existence of dispute facts as to the opportunity for profit or loss. Here, the plaintiffs contended their earnings depended upon the work orders Integrity provided them. Integrity contended, however, that installers could increase their earnings by selling customers additional services. Third, the Court found that disputed facts existed as to the skill required by installers. Integrity contended the job required no formal education and only minimal literacy. The plaintiffs alleged Integrity did not classify cable installers as skilled workers. In contrast, Integrity contended the plaintiffs used skills acquired from working with other installers when completing jobs. Fourth, the parties disputed the permanency and duration of the working relationship. According to the plaintiffs, cable installers' employment with Integrity was indefinite and at-will. Integrity contended none of the plaintiffs worked for an extended period of time for Integrity. Integrity also contended some installers even worked for other businesses.

Because these and other facts were in dispute, the court denied the parties' motions for summary judgment. Significantly, the court's order did not resolve the ultimately issue of whether the plaintiffs were employees or independent contractors. Rather, that issue will be resolved via a jury trial that is scheduled to take place in June 2014.