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February 12, 2019
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In Acosta v. Off Duty Policy Services, Inc., the Sixth Circuit applied the six-factor “economic reality” test to determine whether off-duty officers were misclassified as independent contractors for purposes of the Fair Labor Standards Act (FLSA). There, the employer provided private security services using off-duty, sworn police officers, as well as nonsworn workers. The workers were allowed to accept or reject work assignments, were provided basic equipment, but had to supply their own vehicles and uniforms. The sworn officers typically wore their officer uniforms and used their patrol vehicles, while the nonsworn workers had to use their own police-style vehicle.
The “economic realities” test reviews (1) the permanency of the relationship, (2) degree of skill required, (3) the employer’s right to control the manner in which the work was performed, (4) whether the service rendered is an integral part of the business, (5) the worker’s opportunity for profit or loss, and (6) the worker’s investment in specialized equipment. Not all factors necessarily landed in the employee’s favor. The court stated that the length and consistency of the work supported employee status; there was no difference in degree of skill required between the sworn and nonsworn workers; the lack of supervision was not necessarily indicative of independent contractor status, and may have just meant that the jobs did not require close supervision; the workers’ roles were integral to the employer’s business; the workers did not risk a loss based on their decision to accept or reject a new work assignment; and the amount of investment by workers was trivial compared to that spent by the employer. Ultimately, in balancing the facts in favor of a “strikingly broad” definition of “employee,” the court stated that sworn (and nonsworn) workers were employees for purposes of the FLSA.
This case is just the latest reminder of the complexity behind establishing accurate independent contractor relationships. Companies must tread carefully when working with such agreements.
- Have independent contractor relationships reviewed by legal counsel for compliance.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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