On April 28, 2015, NELA joined the National Employment Law Project (NELP), the Legal Aid Society of New York, Urban Justice Center, and Make the Road New York (MRNY) to file an amicus brief in support of plaintiffs-appellants Mazhar Saleem and more than 200 opt-in plaintiffs and others similarly situated in the case of Saleem v. Corporate Transp. Group, Ltd., Case No. 12-CV-8450, pending in the U.S. Court of Appeals for the Second Circuit. The issue on appeal is whether the district court erred in granting summary judgment to defendants and holding that the plaintiffs, drivers for defendants’ black car transportation business, were “independent contractors” instead of “employees” and thus not covered by the Fair Labor Standards Act (FLSA). The district court found for the defendants in spite of the “ample evidence in the record showing Plaintiffs meet the broad definition of ’employee’ under the FLSA as defined in settled Second Circuit law.” Amici urged the Second Circuit to reverse the district court’s decision and remand to allow a jury to decide the question of the drivers’ employment status under the FLSA.
Misclassification of workers as independent contractors rather than as employees has serious social and economic implications—and is a growing phenomenon. It enables employers to “underpay and overwork their workers, lower their labor costs and avoid paying payroll taxes and other insurance premiums, and leaves workers without critical labor protections” such as those found in the FLSA. It “robs the government’s unemployment insurance and workers’ compensation funds of billions of much-needed dollars, and reduces federal, state, and local tax withholding and revenues.” Moreover, it increases the potential for abuse by employers who seek to take advantage of the economic incentives associated with misclassifying workers as independent contractors and exacerbates the problem as other employers engage in similar conduct in order to compete in the marketplace.
Amici argued that the FLSA is a remedial statute designed to redress worker exploitation. Congress thus broadly defined “employ” to cover most workers. The key question in this case is whether the drivers are running their own businesses separate and independent from defendants’ operations. That question should be answered in the negative, because the drivers are not in business for themselves. Rather, “they perform the central function of Defendants’ business by transporting Defendants’ customers, they are subject to Defendants’ rules and discipline, they are limited in their ability to work for other employers, and they are not able to negotiate their own rates of pay.” The existence of an employment relationship under the FLSA “turns on whether a worker operates an independent business or is instead performing services that are economically integrated into another’s business.” This inquiry is known as the “economic realities test,” and asks whether the workers “depend upon someone else’s business for the opportunity to render service or are in business for themselves.” Godoy v. Rest. Opportunity Ctr. of New York, Inc., 615 F. Supp. 2d 186, 193 (S.D.N.Y. 2009) (internal quotation omitted). The scope of this inquiry is intentionally broader than the scope of employment relationships covered by the traditional common law control test. Further, “since the test concerns the totality of the circumstances, any relevant evidence may be considered, and mechanical application of the test is to be avoided.” Brock v. Superior Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988).
Amici further urged that the district court should be reversed because a jury, rather than the judge, should have determined whether the plaintiffs were independent contractors. In evaluating a motion for summary judgment, courts should not grant the motion—as the district court here did—if there are genuine issues of material fact in dispute. Amici noted that “there is increasing acknowledgement among the federal courts that such fact-intensive decisions are more appropriately decided by a jury and that the court should not decide employment status as a matter of law in the face of conflicting evidence.” The Second Circuit should find that it was an abuse of discretion for the district court to decide that the drivers are independent contractors as a matter of law when there were conflicting indications in the evidence.
Note: For resources on combating summary judgment practice in employment litigation so that individuals whose workplace rights are violated have their day in court and are able to exercise their right to a jury trial, visit The Employee Rights Advocacy Institute For Law & Policy’s website.