Scantland v. Jeffrey Knight, Inc.

Charles R. Bridgers : August 13, 2013 7:24 am

The Fulton County Daily Report recently ran a detailed article on a recent Eleventh U.S. Circuit Court of Appeals decision on misclassification of workers as independent contractors, rather than employees.

From the Article:

A recent Eleventh U.S. Circuit Court of Appeals decision issued a strong admonition to employers: the misclassification of workers as independent contractors rather than employees may have serious financial and operational repercussions for businesses.

As one Florida employer just learned, such outcomes may include lengthy and expensive Fair Labor Standards Act (FLSA) litigation resulting in the certification of a class of more than 500 workers entitled to years of unpaid overtime wages. In Scantland v. Jeffry Knight Inc., the Eleventh Circuit reversed a district court decision granting summary judgment to Knight and held that, if all justifiable inferences were drawn in their favor, a group of cable installers who brought a collective action under the FLSA against Knight were statutory employees, not independent contractors.

Courts in the Eleventh Circuit apply the now familiar six-factor economic realities test to determine whether workers are properly classified as employees or independent contractors for purposes of the FLSA. Although the six factors are not exclusive and no one factor is dominant, each serves as a guidepost in assessing whether a worker is so dependent upon his or her employer so as to come within the protection of the FLSA or sufficiently independent so as to fall outside the reach of the mandatory provisions of the statute.2

In making classification determinations, businesses should evaluate material facts relevant to each criterion through the lens of “economic dependence” to assess whether the relationship with each worker is more analogous to the “usual path” of employee or independent contractor.3 The factors are:

1. The nature and degree of the alleged employer’s control as to the manner in which work is to be performed

2. The alleged employee’s opportunity for profit or loss depending upon his managerial skill

3. The alleged employee’s investment in equipment or materials required for his task or his employment of workers (i.e. subcontractors)

4. Whether the service rendered requires a special skill

5. The degree of permanency and duration of the working relationship

6. The extent to which the service rendered is an integral part of the alleged employer’s business.

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