Labor & Employment Law Daily Jury must decide whether plumbers were employees or independent contractors of construction company
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Friday, April 17, 2020

Jury must decide whether plumbers were employees or independent contractors of construction company

By Brandi O. Brown, J.D.

Although an integral part of the defendants’ business, there was evidence the plaintiffs had control over their work and the jobs they took and shared in the profits and loss.

Adopting a magistrate’s report and recommendation and overruling the plaintiffs’ objections, a federal district court in New York denied their motion for summary judgment in a wage suit brought challenging their status as independent contractors under the FLSA and the New York Labor Law. The court explained that it could not conclude as a matter of law that the construction company was the employer of the plaintiff plumbing subcontractors, even if the parties agreed that the plumbing services they provided were “indeed its entire business.” There were material fact issues regarding the control exercised by the plumbers in their work (Castro v. AABC Construction, Inc., April 9, 2020, Broderick, V.).

Magistrate recommendation. AABC Construction, Inc. is an “emergency service company” that provides services on an as-needed basis. Plumbing services were an integral part of its business, “indeed its entire business.” The plaintiffs are plumbers who helped provide those services. They filed suit against the company, alleging violations of the FLSA and NYLL, including failure to pay overtime. A magistrate judge considered the motion for summary judgment filed by the plaintiffs and recommended that it be denied. The plumbers filed objections to the magistrate’s report. Overruling those objections, the federal district court denied the motion for summary judgment.

Employee status. Noting the standards applicable to determining whether independent contractors are, in fact, employees under the FLSA and NYLL, the court concluded that it could not hold as a matter of law that the defendant employed the plumbers. The parties agreed that the plumbers’ services were integral to the defendant’s business, in fact its “entire business.” Indeed, while the defendant had a contractor’s license, it did not have a plumbing license, and therefore relied on plumbers like the plaintiffs to provide the services that required such a license.

Evidence of control. However, there was evidence the plumbers “exercised a potential high degree of control over their work” such that a jury could conclude they were independent contractors and not employees. There was evidence that they were not supervised when going to the job sites and that, for jobs involving private clients, they set the price and talked to the clients. For other clients, although the defendant set the final price, it was set only after input from the plumber on the job site. There was also evidence that they controlled how they completed jobs, and used their own expertise.

Profits and schedules. It was undisputed that the plumbers were not paid on an hourly or salaried basis—instead they received 25 percent of the net profits from completed jobs. There were material issues regarding whether they had regular working hours—there was evidence that they did not have a set schedule, but only worked “on-call” and provided services as needed on a job-by-job basis. They could also refuse jobs, although the defendant noted that the plumbers gave advance notice of scheduled conflicts. There was also evidence that the plumbers were free to take on other jobs, outside of those provided by the defendant.

Considering all of the evidence, the court concluded that an issue of material fact existed regarding whether the plumbers had a permanent working relationship with the defendant and whether they worked regular hours. The disputes would require a factfinder to weigh the evidence and make credibility determinations. Thus, the court denied the motion, overruled the plumbers’ objections, and directed the parties to meet and confer regarding pre-trial matters.

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