Last week, the U.S. Court of Appeals for the Sixth Circuit recognized that “the way we work in America is changing. The relationships between companies and their workers are more fluid and varied than in decades past.” Acosta v. Off Duty Police Services, Inc., Nos. 17-5995/6071 (6th Cir. Feb. 12, 2019). Many companies now seek to classify their employees as independent contractors in order to avoid providing them overtime, health insurance, workers’ compensation protections, unemployment benefits, and even minimum wage and social security contributions. In 2017, the Trump Administration reversed Obama-era rules combating this trend, signaling that the current Department of Labor would throttle back on investigation and enforcement of the Fair Labor Standards Act when it came to misclassified employees. The Fair Labor Standards Act is the federal law that requires employers to pay their employees minimum wage and overtime.
Despite the well-earned praise afforded police officers for laying their lives on the line for the public, they are routinely targeted for misclassification in their moonlighting jobs across the country. Last week, the Sixth Circuit drew a thin blue line and stood with the police officers suing for their employers’ failure to pay them overtime. In doing so, the Sixth Circuit observed that the definition of “employee” under the Fair Labor Standards Act “is strikingly broad.”
“To determine whether a worker fits within this expansive definition, ‘we must look to see whether the worker, even when labeled as an ‘independent contractor,’ is, as a matter of ‘economic reality,’ an employee.” (quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947)). In the Sixth Circuit, the “economic reality” test considers six factors:
(1) the permanency of the relationship between the parties; (2) the degree of skill required for the rendering of the services; (3) the worker’s investment in equipment or materials for the task; (4) the worker’s opportunity for profit or loss, depending upon his skill; (5) the degree of the alleged employer’s right to control the manner in which the work is performed; and (6) “whether the service rendered is an integral part of the alleged employer’s business.” Courts evaluate these factors with an eye toward the ultimate question—whether someone is economically dependent or independent from the alleged employer.
The Sixth Circuit hears federal appeals Tennessee, Kentucky, Ohio, and Michigan. While North Carolina and South Carolina fall under the Fourth Circuit of Appeals, the test is the same.
If possession is 9/10 of the law, the other 10% is made up of factor tests like the one above. This article will forgo a factor-by-factor recitation of how this analysis goes. Cases evaluating whether moonlighting police officers are employees at their second jobs often stumble on the “permanency” factor and the semantics of the “economic dependence” issue. The lower court in Off Duty Police Services, Inc. found against the officers because they had day jobs (with the police department) and, therefore, their financial well-being was not wholly dependent on their second jobs. The Sixth Circuit completely rejected this rationale, as it would require courts to evaluate the personal net worth of a worker rather than focusing on what really matters.
As the Circuit pointed out “many workers in the modern economy, including employees and independent contractors alike, must routinely seek out more than one source of income to make ends meet. An income-based rule would deny that economic reality.” This factor should instead only be viewed in favor of independent contractor status when the worker bounces from company to company on an assignment basis. There is nothing inconsistent about having two “employers” at two different jobs that one routinely works.
The Sixth Circuit’s analysis of the “control” factor is also significant. Though the company appeared to be pretty lax in monitoring its officers’ activities whatsoever, the Circuit still found that the factor weighed in favor of employee status because the company “unequivocally expressed the right to supervise” workers’ performance.”
An employer cannot creatively transform an employee into an independent contractor by simply renaming their employment agreement as an independent contractor agreement or by requiring their employees to create corporate entities and invoice the employer for their wages. Likewise, an employer cannot get out of being an employer by reciting that it lacks control that, in reality, it actually exerts over its employees. But the inverse can be true according to the Sixth Circuit. A company that reserves control for itself that it does not actually exercise can still have that paper control used against it in an independent contractor analysis.
This decision should be widely applicable to the employment relationships between police officers and their second jobs across the country. Other than this company’s lack of supervision, everything else about the model employed by Off Duty Police Services, Inc. appears consistent with most other employment relationships between off-duty police officers and the companies they moonlight for. But even beyond the security industry, the Sixth Circuit’s persuasive rejection of the employer’s dependence argument should go a long way in dispelling the notion that an employee with two jobs is any less of an employee than someone who only works one job.
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