Class Action Suit should Serve as a Cautionary Tale to Employers That Rely on Independent Contractors

By September 11, 2013

By: Michael Landen
The recent case of Michael Scantland v. Jeffry Knight, Inc. should serve as a cautionary tale to employers that rely on independent contractors.  The case, which was filed in the Middle District of Florida, is a class action suit brought by cable technicians who claim they were wrongly classified as independent contractors so that their employer could avoid paying overtime wages.  The trial court granted summary judgment to the employer, finding that the employees were independent contractors as a matter of law, but the Eleventh Circuit reversed the trial court.

Under the Fair Labor Standards Act, employers must comply with minimum wage and overtime requirements for employees – but not for independent contractors.  This case may impact employers who unintentionally classify individuals as independent contractors rather than employees.
The Eleventh Circuit applied the following six factor test to determine whether the technicians were employees versus independent contractors:

  1. The nature and degree of the alleged employer’s control as to the manner in which the 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
  4. Whether the service rendered requires a special skill;
  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 alleged employer’s business.

Employers who rely on independent contractors should be aware of this opinion.  It is a good idea to evaluate the independent contractor relationship in light of the holding in Scantland and consult with counsel to apply the six-factor test and determine whether the relationship is properly classified.