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September 13, 2010
Was He an Employee or a Contractor?
A Delaware business owner agreed to travel with a friend to New Orleans and work as a temporary cable splicer to repair BellSouth’s telecommunications grid after Hurricane Katrina. They made good money for only 4 months’ work, but the business owner later sued for violation of the Fair Labor Standards Act (FLSA). He charged that BellSouth’s general contractor owed him overtime.

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What happened. Taking their mobile home, bucket trucks, and tools with them, the two friends traveled south to help rewire the grid from October through December 2005. A foreman told them they would be paid $68 per hour plus a $50 per-day allowance and would work some 84 hours a week, and a second foreman later repeated those figures. Once hired, they were told each morning by BellSouth supervisors where to drive their bucket trucks for that day’s assignment.

“Devereau” earned $51,628 in the 4 months before he returned to Delaware. But he sued BellSouth, the general contractor, and the recruiting firm that had contacted his friend, asserting he was owed time-and-a-half for all hours over 40 that he had worked each week. A federal district judge in Louisiana ruled against him, and Devereau appealed to the 5th Circuit, which covers Louisiana, Mississippi, and Texas.

What the court said. Based on a 1993 5th Circuit ruling, appellate judges developed a five-factor test to distinguish employees from contractors: (1) How long was the working relationship? (2) How much control did the alleged employer exercise over the work? (3) How much skill and initiative were required for the work? (4) Did the worker contribute his own equipment and supplies for the job? (5) How much control did the employer have over the worker’s profit and loss?

Judges noted that Devereau was self-employed, so not economically dependent on BellSouth. They also learned that he had used his own bucket truck, cable splicer, ventilator, ladder, climbing belt, and other tools. Like the welders in the 1993 case, the splicers’ jobs were quite specialized. And, although supervisors told them where to work each day, the splicers themselves decided when and how to complete their assignments. Finally, by controlling their expenses, the splicers determined their own profit and loss, judges said. So they were contractors, not employees. Thibault v. BellSouth, et al., U.S. Court of Appeals for the 5th Circuit, No. 08-31226 (7/26/10).

Point to remember: The FLSA’s provisions cover only employees, not independent contractors. If a contractor at first accepts the terms offered by the hiring firm, it is up to him or her to later negotiate different, more desirable terms.

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