Why Was a Carpenter Misclassified as Independent Contractor But a Truck Cleaner Was ‎Not? 

From JDSupra, Richard Reibstein discusses two cases which came to different conclusions — a carpenter was misclassified but a truck cleaner was not. Richard writes:

Two court cases we summarize below, decided in March 2024, demonstrate that while some companies may prevail in an IC misclassification lawsuit, others do not. Why? As a starting point, the legal test for IC status under the federal wage and hour law differs from the test under most state wage laws, and a number of states have different tests for IC status depending on whether the claims are brought for unpaid wages, reimbursement of expenses, workers’ compensation, or unemployment benefits. Do cases typically turn on what law is applicable? Sometimes, but not usually. More often, it’s the facts that matter more than the law. For example, the first case reported below involves a carpenter who was found to have been misclassified as an IC. Yet, in a prior blog post, we reported on a case in which other carpenters were found to be properly classified as ICs. The different results have far less to do with the law than the facts in those cases. What these types of cases teach is that companies can minimize their misclassification liabilities, regardless of the applicable tests for IC status, if their IC relationships are structured, documented, and implemented in a way that maximizes compliance with most if not all IC laws. Can that be done? Yes, indeed many companies have accomplished that objective in a customized and sustainable manner through a process such as IC Diagnostics (TM).

In the Courts (3 cases)

FEDERAL APPELLATE COURT UPHOLDS JURY VERDICT THAT A CATTLE RANCH MISCLASSIFIED A CARPENTER. The United States Court of Appeals for the Eleventh Circuit has affirmed a verdict by a Florida jury that a carpenter providing services to a cattle ranch was not an independent contractor but rather an employee who was entitled to overtime compensation under the Fair Labor Standards Act. The Eleventh Circuit also affirmed the jury’s verdict in favor of the cattle ranch on its counterclaim that the carpenter breached his agreement with the ranch when he falsely claimed he worked hours he had not. In concluding there was sufficient evidence for the jury to find that the carpenter was an employee, the appeals court cited testimony that the ranch offered benefits such as paid vacation days, a 401(k) plan, and insurance, and a supervisor set the carpenter’s work schedule, reviewed his time sheets and relayed assignments daily. The Eleventh Circuit also upheld the district court’s denial of the carpenter’s request for an award of liquidated damages because the ranch had acted in good faith by relying on the independent contractor acknowledgement form that the carpenter signed, his tax records on which he claimed he was self-employed, and the advice of legal counsel in treating him as an independent contractor. Cornelius v. Rollins Ranches LLC, No. 22-12862 (11th Cir. Mar. 15, 2024).

STATE APPELLATE COURT AFFIRMS DECISION THAT A TRUCK CLEANER HAD BEEN PROPERLY CLASSIFIED AS AN IC. An Ohio state appellate court has upheld a trial court’s decision that truck cleaner was an independent contractor and not an employee of a truck refurbishment company. Big Truck Rehab Center is a business that uses truck cleaners to pressure wash, detail, and paint trucks for resale to used truck dealerships. One of its truck cleaners filed suit in 2022 asserting he was entitled to unpaid overtime compensation under the Fair Labor Standards Act and the Ohio Minimum Wage Standards Act due to his alleged misclassification as an independent contractor. Following a bench trial culminating with the trial court finding that the cleaner was an independent contractor, the cleaner appealed. The state appeals court reached the same conclusion as the trial court but applied a different test for determining IC or employee status. Instead of using the FLSA’s economic realities test, which had been used by the trial court, the appeals court adopted a non-exclusive six-part test used by Ohio state courts. The appellate court focused on the facts that the cleaner had executed an independent contractor agreement; conducted his own detailing business; engaged helpers; had an employer tax number and took deductions for expenses including supplies, materials, and depreciation; ‎was not told how to perform the work; determined his rate of pay and what he paid his own helpers; and set his own work hours. The court noted that the outcome of the case would be the same regardless of which test was applied. Coleman v. Big Truck Rehab Center Inc., No. 112964 (Ct. App. Ohio, Eighth Appellate Dist. Mar. 14, 2024).

Read the full story at Why Was a Carpenter Misclassified as Independent Contractor But a Truck Cleaner Was ‎Not? March 2024 IC Legal News Update | Locke Lord LLP – JDSupra

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