Independent Homekeeper Agreement
This Independent Homekeeper Agreement (the “Agreement”) sets forth the terms and conditions whereby you, an independent service provider fully-licensed (to the extent required by applicable law) and qualified to provide the services contemplated by this Agreement (the”Independent Homekeeper”), agree to provide certain services including residential or commercial cleanings or similar services to third parties that may, from time to time, be referred to you via the web-based platform of TIDY4ME Services, Inc., a Delaware corporation, (“TIDY4ME”).
- GENERAL PROVISIONS
1.1 Background Statement.
TIDY4ME is the creator of a technology platform that connects clients (“Service Requesters”) with fully-licensed (to the extent required by applicable law) and qualified professionals, such as Independent Homekeeper, in the business of providing residential and/or commercial cleanings (“Services”). TIDY4ME provides a web-based portal (the”TIDY4ME Platform”) through which Service Requesters may connect with a network of Independent Homekeepers with whom they may arrange a variety of Services. TIDY4ME and Independent Homekeeper intend that Independent Homekeeper will provide these services to Service Requesters strictly as an independent contractor, and not as an employee, agent, joint venturer, partner or franchisee of TIDY4ME or any Service Requester for any purpose. TIDY4ME does not provide the Services described in this Agreement and does not employ individuals to perform said Services. TIDY4ME’s role is limited to offering the technology platform as a referral tool for Service Requesters and Independent Homekeepers and facilitating payments from Service Requesters to Independent Homekeepers.
1.2 The TIDY4ME Platform.
- THE SERVICES
Independent Homekeeper shall be eligible to book residential or commercial cleaning Jobs through the TIDY4ME Platform so long as they are fully-licensed (to the extent required by applicable law) and qualified. In those jurisdictions where a license, permit, or certification is required to perform the Services, Independent Homekeeper shall, upon request, provide proof to TIDY4ME of all necessary licenses, permits and/or certifications before Independent Homekeeper provides any such Services under this Agreement.
2.1 Job Completion.
To ensure that the TIDY4ME platform remains a reliable source of referrals and to ensure all Independent Homekeepers are able to have access to available Jobs, once Independent Homekeeper has been awarded the Job, Independent Homekeeper is contractually obligated to complete the Job within the Timeframe specified by, and to the satisfaction of, the Service Requester. Cancellation by Independent Homekeeper may result in a fee being charged to Independent Homekeeper as described further in Schedule 1, which may be modified from time to time by TIDY4ME. Independent Homekeeper and Service Requester may reschedule a Job without Independent Homekeeper incurring a fee, provided the Job is rescheduled outside of the timeframes set forth in the then-applicable Schedule 1. If Service Requester and Independent Homekeeper agree to reschedule, Independent Homekeeper agrees to notify TIDY4ME as promptly as possible so that TIDY4ME may update its Platform. In the event that the Service Requester declines to reschedule, TIDY4ME shall have the right to make the Job available on the TIDY4ME Platform.
Independent Homekeeper understands and agrees that Independent Homekeeper’s failure to complete a Job in accordance with Service Requester’s specifications after he or she has booked that Job using the Platform constitutes a material breach of this Agreement and could result in a fee being charged to Independent Homekeeper as set forth in Schedule 1, as modified from time to time by TIDY4ME, or termination of this Agreement in accordance with paragraph 9. Similarly, Independent Homekeeper may be entitled to a fee in the event a Service Requester cancels or reschedules a Job as described further in Schedule 1. Modifications to Schedule 1 will be effective upon written notification to Independent Homekeeper and will supersede any and all prior versions.
By accepting this Agreement, Independent Homekeeper authorizes TIDY4ME to withhold the foregoing cancellation fees, and any other contractual penalty fees referenced in this Agreement, from Independent Homekeeper’s Service Fees.
2.2 Service Requester Ratings.
Independent Homekeeper acknowledges that the TIDY4ME Platform is intended to refer Service Requesters only to those Independent Homekeepers who maintain the highest standards of professionalism and quality service. Independent Homekeeper agrees to maintain high standards of professionalism and service, including but not limited to maintaining tools and materials consistent with industry standard and in good working condition, maintaining appearance and grooming standards consistent with industry standard, and maintaining a Service Requester rating at or above the minimum rating established by TIDY4ME for access to the platform, in accordance with Schedule 1 hereto, as modified from time to time. In the event a Independent Homekeeper’s aggregate rating falls below the applicable minimum rating, TIDY4ME reserves the right to deactivate the Independent Homekeeper’s access to the TIDY4ME Platform.
2.3 No Control.
TIDY4ME shall not control or have any right to control the manner or means by which Independent Homekeeper performs the Services, including but not limited to the time and place Independent Homekeeper performs the Services, the Jobs Independent Homekeeper selects, the tools and materials used by Independent Homekeeper to complete the Jobs, the helpers, assistants, subcontractors or other personnel (if any) used by Independent Homekeeper to assist in completing Jobs, or the manner in which Independent Homekeeper completes the Jobs. TIDY4ME will not and has no right to, under any circumstances, inspect Independent Homekeeper’s work for quality purposes. Those provisions of the Agreement reserving ultimate authority in TIDY4ME have been inserted solely to achieve compliance with federal, state, or local laws, regulations, and interpretations thereof.
Where approved in advance by the Service Requester, and except as otherwise provided in this Agreement, Independent Homekeeper is not obligated to personally perform the Services. Independent Homekeeper shall furnish at his/her own discretion, selection, and expense any and all assistants, helpers, subcontractors or other personnel the Independent Homekeeper deems necessary and appropriate to complete the Services. Independent Homekeeper shall be solely responsible for the direction and control of any such personnel.
Before any Services are performed by any assistants, helpers, subcontractors or other personnel engaged by Independent Homekeeper, Independent Homekeeper shall require any such individuals to submit to a background check equivalent to one that TIDY4ME performs and provide proof of that background check. Independent Homekeeper agrees that any assistants, helpers, subcontractors or other personnel used shall maintain a professional appearance consistent with industry standards while performing Services.
Independent Homekeeper assumes full and sole responsibility for the payment of all compensation, benefits and expenses of helpers, assistants, subcontractors and/or other personnel, if any, and for all required state and federal income tax withholdings, unemployment insurance, and social security taxes as to Independent Homekeeper and all persons engaged by Independent Homekeeper in the performance of the Services.
- SERVICE FEES
3.1 Service Fees.
Service Requester shall pay for completed Jobs through the TIDY4ME Platform at the rates quoted by TIDY4ME at the time the Job is posted on the Platform, which shall be based on the stated parameters of the Job (the “Job Rate”). Each Job made available to Independent Homekeeper on the Platform shall set forth the Timeframe, Estimated Work Time, details about the Service requested, the Job Rate, and the estimated Service Fee the Independent Homekeeper shall be entitled to upon completion of the Job, in accordance with Schedule 1 hereto, as modified from time to time. The difference between the Job Rate and Service Fee shall be the fee owed to TIDY4ME for referring the Job and facilitating the payment from Service Requester to Independent Homekeeper (“Booking Fee”).
Modifications to Schedule 1 will be effective upon written notification to Independent Homekeeper and will supersede any and all prior versions. By accepting this Agreement, Independent Homekeeper authorizes TIDY4ME to withhold TIDY4ME’s Booking Fee from the payment made to the Independent Homekeeper for each Job.
3.2 Additional Service Negotiation.
If a Job referred to and accepted by Independent Homekeeper requires more time to complete than the Estimated Work Time, Service Requester and Independent Homekeeper may negotiate Additional Service based on the estimated additional time needed to complete the Job (“Additional Service”). Any agreement for Additional Service is solely between Independent Homekeeper and Service Requester, and TIDY4ME shall have no right to any fees for the Additional Service.
3.3 Service Fee Payment.
When a Job is complete, Independent Homekeeper will submit to the Service Requester and TIDY4ME confirmation that the Job is complete. TIDY4ME shall then remit payment for each Job, less TIDY4ME’s booking fee, within fifteen (15) business days. TIDY4ME’s failure to remit payment within ten (10) business days shall constitute a material breach of this Agreement. If applicable, TIDY4ME will report the payments paid to Independent Homekeeper under this Agreement by filing the appropriate Form 1099 with the Internal Revenue Service as required by law.
3.4 Referral Fee.
TIDY4ME understands and accepts that many Independent Homekeepers and Service Requesters ultimately want to work directly, outside the TIDY4ME Platform. One use of the TIDY4ME Platform is as a marketing tool for Independent Homekeepers to build their business outside the platform in this manner. At any time, if Independent Homekeeper decides to engage Service Requester without the use of the TIDY4ME Platform and Service Requester cancels their use of the TIDY4ME Platform, then Independent Homekeeper agrees to pay a Referral Fee of $500 to TIDY4ME. Independent Homekeeper agrees to have the Referral Fee withheld from any pending payments, or remit payment within ten (10) business days. Independent Homekeeper’s failure to remit payment shall constitute a material breach of this Agreement. If applicable, Independent Homekeeper will report the payments paid to TIDY4ME under this Agreement by filing the appropriate Form 1099 with the Internal Revenue Service as required by law.
- EQUIPMENT AND OPERATIONS
4.1 Compatible Mobile Device.
In order to book Jobs, Independent Homekeeper must possess a smartphone equipped with access to the TIDY4ME Platform (the “Compatible Mobile Device”). TIDY4ME may collect data, such as features the Independent Homekeeper uses on the TIDY4ME Platform, for the purpose of improving the software or running the software itself.
Geo-Tracking. In order to book Jobs, Independent Homekeeper must use TIDY4ME’s Independent Homekeeper mobile application or website (the “Homekeeper App”) on the Compatible Mobile Device. TIDY4ME collects the latitude and longitude location (“Location Coordinates”) of the Compatible Mobile Device from the Homekeeper App only while the software is in use. This is for the purpose of providing support in case the Independent Homekeeper and Service Requester cannot find each other, resolving disputes between Independent Homekeepers and Service Requesters, and confirming that the Job is completed. In addition, at any point, TIDY4ME may collect the Location Coordinates of the Compatible Mobile Device on which the Homekeeper App is installed for the purpose of referring jobs to a Independent Homekeeper that are posted on short notice by Service Requesters in the Independent Homekeeper’s vicinity. Independent Homekeeper shall have no obligation to accept any Job offered in this manner. For a 30 minute period prior to the scheduled start of a Job until the job is marked Completed by the Independent Homekeeper, TIDY4ME may share the Independent Homekeeper’s Location Coordinates with the Service Requester who requested the Job for the sole purpose of assisting the Service Requester and Independent Homekeeper to coordinate the Services. TIDY4ME may also disclose the Independent Homekeeper’s location information as required by applicable law, to authorized service providers, or when TIDY4ME believes that such disclosure is necessary to protect the rights, property, or safety of TIDY4ME, TIDY4ME Platform users, Service Requesters, or others. TIDY4ME has no right to collect or use GPS data for the purpose of controlling or monitoring the manner and means by which the Independent Homekeeper provides the Services contemplated by this Agreement, or the frequency with which the Independent Homekeeper uses the TIDY4ME Platform to book Jobs. The Independent Homekeeper may stop Location Coordinates at any time. By executing this Agreement, Independent Homekeeper agrees to the use and disclosure of Location Coordinates information as described above.
4.2 Equipment Expenses and Sales.
Independent Homekeeper is solely responsible for any costs or expenses incurred by Independent Homekeeper in connection with the performance of the Services, and in no event shall TIDY4ME reimburse, or be required to reimburse, Independent Homekeeper for any tools, materials, costs or expenses used in connection with the Services. Independent Homekeeper shall furnish and maintain, at Independent Homekeeper’s own expense, the tools, equipment, supplies, and other materials used to perform the Services. Independent Homekeeper, at Independent Homekeeper’s sole discretion, shall determine what equipment, supplies, and materials are necessary to perform the Services, and where, when, and at what cost, to purchase or maintain any necessary equipment, supplies, tools, and materials. TIDY4ME may request at any time a list of the equipment and supplies used by Independent Homekeeper, to communicate effectively with Service Requesters. At Independent Homekeeper’s request, TIDY4ME may offer to Independent Homekeeper certain equipment, supplies, and materials for rental or purchase. Independent Homekeeper is not required to rent, use, or purchase any equipment, tools, supplies, or materials from TIDY4ME at any time.
4.3 TIDY4ME Apparel, Supplies, and Equipment.
TIDY4ME may chose to give or sell branded or unbranded equipment, supplies, or apparel, but this does not imply or suggest any obligation to wear, display, or use such items. Independent Homekeepers will have no obligation whatsoever to wear, use, or display any equipment, supplies, or apparel.
- RELATIONSHIP OF THE PARTIES
Independent Homekeeper is an independent contractor and has not been engaged by TIDY4ME to perform services on TIDY4ME’s behalf. Rather, Independent Homekeeper has entered into this Agreement for the purpose of obtaining referrals to third parties in exchange for which it pays TIDY4ME a fee, as described herein. This Agreement shall not be construed to create any association, partnership, joint venture, employee or agency relationship between Independent Homekeeper and TIDY4ME or any Service Requester for any purpose. Independent Homekeeper has no authority (and shall not hold himself or herself out as having authority) to bind TIDY4ME and Independent Homekeeper shall not make any agreements or representations on TIDY4ME’s behalf without TIDY4ME’s prior written consent. Independent Homekeeper understands that Independent Homekeeper will not be eligible to participate in any benefit plans offered to TIDY4ME’s employees, including, but not limited to, vacation, group medical or life insurance, disability, profit sharing or retirement benefits or any other fringe benefits or benefit plans offered by TIDY4ME to its employees. TIDY4ME will not be responsible for withholding or paying any income, payroll, Social Security, or other federal, state, or local taxes, making any insurance contributions, including unemployment or disability, or obtaining workers’ compensation insurance on Independent Homekeeper’s behalf. Independent Homekeeper shall be responsible for, and shall indemnify and hold TIDY4ME harmless for any claims, suits, or actions related to this provision, including any such claims brought by Independent Homekeeper or by any third party with respect to any claims for taxes or contributions, including penalties and interest.
- REPRESENTATIONS AND WARRANTIES
Independent Homekeeper represents and warrants to TIDY4ME that: (a) Independent Homekeeper has the legal right to provide the Services that are contemplated by this Agreement in the United States; (b) Independent Homekeeper is fully-licensed (to the extent required by applicable law) and authorized to provide the Services contemplated by this Agreement within the jurisdiction in which Independent Homekeeper intends to offer said Services, and has the required skill, experience, and qualifications to perform the Services; and (c) Independent Homekeeper shall perform the Services in a professional and diligent manner in accordance with best industry standards for similar services, including the completion of all Jobs referred to Independent Homekeeper that he/she opts to accept through the Platform.
Independent Homekeeper represents and warrants to TIDY4ME that they have read and understand the US Department of Labor’s Administrator’s Interpretation No. 2015-1 dated July 15, 2015 (Appendix A). Independent Homekeeper agrees that every individual’s unique circumstances dictate whether they can be classified as an Independent Contractor. Independent Homekeeper agrees that under the “Suffer or Permit” standard they should be classified as an independent contractor and are “in business for him or herself”. Independent Homekeeper represents and warrants that they currently conduct and intend to continue conducting the following activities: (a) having business outside the TIDY4ME platform; (b) independently scheduling assignments and jobs outside the TIDY4ME platform; (c) marketing, advertising and soliciting work from other clients; (d) endeavoring to reduce costs; (e) deciding when, where, and how to perform services; (f) deciding which services to perform or which clients to accept; (g) determining the sequence of work; (h) determining the appropriate materials to complete the job; (i) determining when to order materials, the quantity of those materials, and providing the materials to complete the job; (j) providing a professional work vehicle and insurance; (k) incuring profit or losses in the performance of the overall business of Independent Homekeeper, including your work on the TIDY4ME Platform; (l) performing work that requires special skill and initiative; (m) making substantial investment in your business; and (m) agree that joining the TIDY4ME platform does not constitute a permanent relationship.
Independent Homekeeper acknowledges that his/her failure to comply with the foregoing shall constitute a material breach of this Agreement. If Independent Homekeeper feels they cannot continue representing and warranting the foregoing, they are to stop using the platform and notify TIDY4ME immediately.
Independent Homekeeper also represents, warrants, and agrees the following:
- a) They will not engage in a reckless or dangerous manner that may pose a safety issue with clients.
- b) They will not make any misrepresentation regarding TIDY4ME, the TIDY4ME Platform, or the Services.
c) They will not attempt to defraud TIDY4ME or clients on the TIDY4ME Platform or in connection with your provision of Services.
- d) They agree that TIDY4ME may obtain information about Independent Homekeeper, including criminal records, and other necessary authorizations to facilitate our access to such records during the term of the Agreement.
- e) You will pay all applicable federal, state and local taxes based on your provision of Services and any payments received by you
Independent Homekeeper shall defend, indemnify and hold harmless TIDY4ME and its affiliates and their officers, directors, employees, agents, successors, and assigns from and against all losses, damages, liabilities, deficiencies, actions, judgments, interest, awards, penalties, fines, costs, or expenses of whatever kind (including reasonable attorneys’ fees) arising out of or resulting from: (a) bodily injury, death of any person, theft or damage to real or tangible, personal property resulting from Independent Homekeeper’s acts or omissions; and (b) Independent Homekeeper’s breach of any representation, warranty, or obligation under this Agreement.
The Services that Independent Homekeeper provides pursuant this Agreement are fully and entirely Independent Homekeeper’s responsibility. TIDY4ME is not responsible or liable for the actions or inactions of a Service Requester or other third party in relation to the Services provided by Independent Homekeeper. Independent Homekeeper understands, therefore, that by using the TIDY4ME Platform, Independent Homekeeper may be introduced to third parties that may be potentially dangerous, and that Independent Homekeeper uses the TIDY4ME Platform at his/her own risk.
It is the sole responsibility of the Independent Homekeeper to maintain in full force and effect adequate workers’ compensation (or, if permitted by law, occupational accident insurance), unemployment, liability, and other forms of insurance, with policy limits sufficient to protect and indemnify TIDY4ME and its affiliates, and each of their officers, directors, agents, employees, subsidiaries, partners, members, controlling persons, and successors and assigns, from any losses resulting from the conduct, acts, or omissions of Independent Homekeeper or Independent Homekeeper’s assistants, agents, contractors, servants, or employees.
- TERM; TERMINATION
This Agreement shall be effective as of the date it is executed by Independent Homekeeper and shall remain in effect unless and until terminated as set forth in this paragraph 9 (the “Term”). Independent Homekeeper understands that TIDY4ME may temporarily deactivate Independent Homekeeper’s profile on Platform in the event that Independent Homekeeper is inactive on the Platform for a period that exceeds 14 days. In such circumstances, TIDY4ME shall reactivate Independent Homekeeper’s profile upon request from Independent Homekeeper.
The parties acknowledge that the term of this Agreement does not reflect an uninterrupted service arrangement, as this Agreement guarantees Independent Homekeeper the right to choose when to make himself or herself available and each Job referred and accepted is treated as a separate service arrangement.
TIDY4ME and Independent Homekeeper may terminate this Agreement, effective immediately upon written notice to the other party, in the event that other party materially breaches this Agreement. A material breach shall include, but not be limited to, the acts or omissions expressly defined as constituting a material breach herein or TIDY4ME’s failure to timely remit Service Fees as described herein. In addition to the foregoing, Independent Homekeeper may terminate the Agreement for any reason upon seven (7) days’ written notice to TIDY4ME.
In addition, TIDY4ME may terminate this Agreement or deactivate Independent Homekeeper account immediately in the event they: (1) no longer qualify to provide Services under applicable law, rule, permit, ordinance or regulation; (2) fall below the TIDY4ME Client Cancellation Threshold as described in Schedule 2; (3) fall below the TIDY4ME Cleaning Cancellation Threshold as described in Schedule 2; (4) TIDY4ME has the good faith belief that such action is necessary to protect the safety of the TIDY4ME community or third parties, provided that in the event of a deactivation pursuant to (1)-(4) above, Independent Homekeeper will be given notice of the potential or actual deactivation and an opportunity to attempt to cure the issue to TIDY4ME’s reasonable satisfaction prior to TIDY4ME permanently terminating the Agreement.
For all other breaches of this Agreement, Independent Homekeeper will be provided notice and an opportunity to cure the breach. If the breach is cured in a timely manner and to TIDY4ME’s satisfaction, this Agreement will not be permanently terminated.
9.3 Independent Homekeeper’s Obligations Upon Termination.
Upon termination of this Agreement for any reason, Independent Homekeeper shall: (a) complete any outstanding Jobs Independent Homekeeper has claimed (the “Outstanding Jobs”); (b) within ten (10) days after such termination, or as otherwise agreed in writing, return any rented property in Independent Homekeeper’s possession; and (c) if requested, certify in writing to TIDY4ME that Independent Homekeeper has complied with the requirements of this paragraph.
9.4 TIDY4ME’s Obligations Upon Termination.
Upon termination of this Agreement: (a) if the termination is effected by TIDY4ME, TIDY4ME shall pay to Independent Homekeeper any outstanding earned Service Fees the earlier of seven (7) days or the next scheduled payment date; or (b) if the termination is effected by Independent Homekeeper, TIDY4ME shall pay to Independent Homekeeper any outstanding earned Service Fees within ten (10) business days. In either event, TIDY4ME shall pay Service Fees for any Outstanding Jobs as soon as practicable after Independent Homekeeper has completed the Outstanding Jobs.
9.5 Surviving Provisions.
The terms and conditions of this paragraph 9.5 and paragraphs 5, 6, 7, 9.3, 9.4, 10, 11, 12 and 13 shall survive the expiration or termination of this Agreement.
- OTHER BUSINESS ACTIVITIES
Independent Homekeeper may be engaged or employed in any other business, trade, profession, or other activity, including providing Services to customers booked through means other than the TIDY4ME Platform, including other web-based portals. In addition, Independent Homekeeper may affirmatively solicit Service Requesters originally referred through the TIDY4ME Platform to book jobs through a means other than the TIDY4ME Platform for the Referral Fee (described in section 3.4).
Independent Homekeeper may not assign this Agreement, absent written authorization by TIDY4ME. TIDY4ME may freely assign its rights and obligations under this Agreement at any time. This Agreement will inure to the benefit of, be binding on, and be enforceable against, each of the parties hereto and their respective successors and assigns.
- GOVERNING LAW; ARBITRATION
The interpretation of this Agreement shall be governed by California law, without regard to the choice or conflicts of law provisions of any jurisdiction, and any disputes, actions, claims or causes of action arising out of or in connection with this Agreement or the TIDY4ME Services shall be subject to the exclusive jurisdiction of the state and federal courts located in Orange County, California. However, neither the choice of law provision regarding the interpretation of this Agreement nor the forum selection provision is intended to create any other substantive right to non-Californians to assert claims under California law whether that be by statute, common law, or otherwise. These provisions are only intended to specify the use of California law to interpret this Agreement and the forum for disputes asserting a breach of this Agreement, and these provisions shall not be interpreted as generally extending California law to Independent Homekeeper if they do not otherwise reside or provide services in California. The failure of Company to enforce any right or provision in this Agreement shall not constitute a waiver of such right or provision unless acknowledged and agreed to by TIDY4ME in writing.
Other than disputes regarding the intellectual property rights of the parties, any disputes, actions, claims or causes of action arising out of or in connection with this Agreement or the TIDY4ME Services may be subject to arbitration pursuant to Section 12.3.
12.3 Arbitration Provision
Important Note Regarding this Arbitration provision:
- Arbitration does not limit or affect the legal claims you may bring against the Company. Agreeing to arbitration only affects where any such claims may be brought and how they will be resolved.
- Arbitration is a process of private dispute resolution that does not involve the civil courts, a civil judge, or a jury. Instead, the parties’ dispute is decided by a private arbitrator selected by the parties using the process set forth herein. Other arbitration rules and procedures are also set forth herein.
- Unless the law requires otherwise, as determined by the Arbitrator based upon the circumstances presented, you will be required to split the cost of any arbitration with the Company.
- IMPORTANT: This arbitration provision will require you to resolve any claim that you may have against the Company or TIDY4ME on an individual basis pursuant to the terms of the Agreement unless you choose to opt out of the arbitration provision. This provision will preclude you from bringing any class, collective, or representative action against the Company or TIDY4ME. It also precludes you from participating in or recovering relief under any current or future class, collective, or representative action brought against the Company or TIDY4ME by someone else.
- Cases have been filed against TIDY4ME, against similar services, and may be filed in the future involving claims by users of the Service, including Independent Homekeepers. You should assume that there are now, and may be in the future, lawsuits against the Company or TIDY4ME alleging class, collective, and/or representative claims on your behalf, including but not limited to claims for tips, reimbursement of expenses, and employment status. Such claims, if successful, could result in some monetary recovery to you. (CASES AGAINST TIDY4ME INCLUDE, FOR EXAMPLE, SUSAN ARCHULETTA ET AL V. TIDY4ME SERVICES INC., CASE NO. 30-2006-00861892-cu-oe-cxc ) (CASES FOR SIMILAR SERVICES INCLUDE, FOR EXAMPLE, LAVITMAN V. UBER TECHNOLOGIES, INC., ET AL., CASE NO. 1:13-cv-10172-DJC (DISTRICT OF MASSACHUSETTS) ; YUCESOY ET AL. V. UBER TECHNOLOGIES, INC., ET AL., CASE NO. 14-0576-C (MASSACHUSETTS SUPERIOR COURT); AND O’CONNOR V. UBER TECHNOLOGIES, INC., ET AL., CASE NO. CV 13-03826-EMC (NORTHERN DISTRICT OF CALIFORNIA).
- The mere existence of such class, collective, and/or representative lawsuits, however, does not mean that such lawsuits will ultimately succeed. But if you do agree to arbitration with the Company, you are agreeing in advance that you will not participate in and therefore, will not seek to recover monetary or other relief under any such class, collective, and/or representative lawsuit.
- However, as discussed above, if you agree to arbitration, you will not be precluded from bringing your claims against the Company or TIDY4ME in an individual arbitration proceeding. If successful on such claims, you could be awarded money or other relief by an arbitrator (subject to splitting the cost of arbitration as mentioned above).
WHETHER TO AGREE TO ARBITRATION IS AN IMPORTANT BUSINESS DECISION. IT IS YOUR DECISION TO MAKE, AND YOU SHOULD NOT RELY SOLELY UPON THE INFORMATION PROVIDED IN THIS AGREEMENT AS IT IS NOT INTENDED TO CONTAIN A COMPLETE EXPLANATION OF THE CONSEQUENCES OF ARBITRATION. YOU SHOULD TAKE REASONABLE STEPS TO CONDUCT FURTHER RESEARCH AND TO CONSULT WITH OTHERS — INCLUDING BUT NOT LIMITED TO AN ATTORNEY — REGARDING THE CONSEQUENCES OF YOUR DECISION, JUST AS YOU WOULD WHEN MAKING ANY OTHER IMPORTANT BUSINESS OR LIFE DECISION.
- How This Arbitration Provision Applies.
This Arbitration Provision is governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (the “FAA”) and evidences a transaction involving commerce. This Arbitration Provision applies to any dispute arising out of or related to this Agreement or termination of the Agreement and survives after the Agreement terminates. Nothing contained in this Arbitration Provision shall be construed to prevent or excuse you from utilizing any procedure for resolution of complaints established in this Agreement (if any), and this Arbitration Provision is not intended to be a substitute for the utilization of such procedures.
Except as it otherwise provides, this Arbitration Provision is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or before a forum other than arbitration. This Arbitration Provision requires all such disputes to be resolved only by an arbitrator through final and binding arbitration on an individual basis only and not by way of court or jury trial, or by way of class, collective, or representative action.
Such disputes include without limitation disputes arising out of or relating to interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration Provision. All such matters shall be decided by an Arbitrator and not by a court or judge.
Except as it otherwise provides, this Arbitration Provision also applies, without limitation, to disputes arising out of or related to this Agreement and disputes arising out of or related to your relationship with the Company, including termination of the relationship. This Arbitration Provision also applies, without limitation, to disputes regarding any city, county, state or federal wage-hour law, trade secrets, unfair competition, compensation, breaks and rest periods, expense reimbursement, termination, harassment and claims arising under the Uniform Trade Secrets Act, Civil Rights Act of 1964, Americans With Disabilities Act, Age Discrimination in Employment Act, Family Medical Leave Act, Fair Labor Standards Act, Employee Retirement Income Security Act (except for claims for employee benefits under any benefit plan sponsored by the Company and covered by the Employee Retirement Income Security Act of 1974 or funded by insurance), Genetic Information Non-Discrimination Act, and state statutes, if any, addressing the same or similar subject matters, and all other similar federal and state statutory and common law claims.
This Agreement is intended to require arbitration of every claim or dispute that lawfully can be arbitrated, except for those claims and disputes which by the terms of this Agreement are expressly excluded from the Arbitration Provision.
The parties expressly agree that TIDY4ME is an intended third-party beneficiary of this Arbitration Provision.
- Limitations On How This Agreement Applies.
The disputes and claims set forth below shall not be subject to arbitration and the requirement to arbitrate set forth in this Arbitration Provision shall not apply:
Claims for workers compensation, state disability insurance and unemployment insurance benefits;
Regardless of any other terms of this Arbitration Provision, claims may be brought before and remedies awarded by an administrative agency if applicable law permits access to such an agency notwithstanding the existence of an agreement to arbitrate. Such administrative claims include without limitation claims or charges brought before the Equal Employment Opportunity Commission (www.eeoc.gov), the U.S. Department of Labor (www.dol.gov), the National Labor Relations Board (www.nlrb.gov), or the Office of Federal Contract Compliance Programs (www.dol.gov/esa/ofccp). Nothing in this Arbitration Provision shall be deemed to preclude or excuse a party from bringing an administrative claim before any agency in order to fulfill the party’s obligation to exhaust administrative remedies before making a claim in arbitration;
Disputes that may not be subject to predispute arbitration agreement as provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203) are excluded from the coverage of this Arbitration Provision; Disputes regarding your, the Company’s, or TIDY4ME’s intellectual property rights;
This Arbitration Provision shall not be construed to require the arbitration of any claims against a contractor that may not be the subject of a mandatory arbitration agreement as provided by section 8116 of the Department of Defense (“DoD”) Appropriations Act for Fiscal Year 2010 (Pub. L. 111-118), section 8102 of the Department of Defense (“DoD”) Appropriations Act for Fiscal Year 2011 (Pub. L. 112- 10, Division A), and their implementing regulations, or any successor DoD appropriations act addressing the arbitrability of claims.
iii. Selecting The Arbitrator and Location of the Arbitration.
The Arbitrator shall be selected by mutual agreement of the Company and you. Unless you and the Company mutually agree otherwise, the Arbitrator shall be an attorney licensed to practice in the location where the arbitration proceeding will be conducted or a retired federal or state judicial officer who presided in the jurisdiction where the arbitration will be conducted. If the Parties cannot agree on an Arbitrator, then an arbitrator will be selected using the alternate strike method from a list of five (5) neutral arbitrators provided by JAMS (Judicial Arbitration & Mediation Services). You will have the option of making the first strike. If a JAMS arbitrator is used, then the JAMS Streamlined Arbitration Rules & Procedures rules will apply. Those rules are available here:
The location of the arbitration proceeding shall be no more than 45 miles from the place where you last provided services under this Agreement, unless each party to the arbitration agrees in writing otherwise.
- Starting The Arbitration.
All claims in arbitration are subject to the same statutes of limitation that would apply in court. The party bringing the claim must demand arbitration in writing and deliver the written demand by hand or first class mail to the other party within the applicable statute of limitations period. The demand for arbitration shall include identification of the Parties, a statement of the legal and factual basis of the claim(s), and a specification of the remedy sought. Any demand for arbitration made to the Company or TIDY4ME shall be provided to Legal, TIDY4ME Services, LLC 37437 Bayberry St, Palmdale , CA 93550 . The arbitrator shall resolve all disputes regarding the timeliness or propriety of the demand for arbitration. A party may apply to a court of competent jurisdiction for temporary or preliminary injunctive relief in connection with an arbitrable controversy, but only upon the ground that the award to which that party may be entitled may be rendered ineffectual without such provisional relief.
- How Arbitration Proceedings Are Conducted.
In arbitration, the Parties will have the right to conduct adequate civil discovery, bring dispositive motions, and present witnesses and evidence as needed to present their cases and defenses, and any disputes in this regard shall be resolved by the Arbitrator.
You and the Company agree to resolve any dispute in arbitration on an individual basis only, and not on a class, collective, or private attorney general representative action basis. The Arbitrator shall have no authority to consider or resolve any claim or issue any relief on any basis other than an individual basis. If at any point this provision is determined to be unenforceable, the parties agree that this provision shall not be severable, unless it is determined that the Arbitration may still proceed on an individual basis only.
While the Company will not take any retaliatory action in response to any exercise of rights you may have under Section 7 of the National Labor Relations Act, if any, the Company shall not be precluded from moving to enforce its rights under the FAA to compel arbitration on the terms and conditions set forth in this Agreement.
- Paying For The Arbitration.
TIDY4ME shall pay all costs unique to arbitration (as compared to the costs of adjudicating the same claims before a court), including the regular and customary arbitration fees and expenses (to the extent not paid by TIDY4ME pursuant to the fee provisions above). However, if you are the party initiating the Claim, you shall be responsible for contributing up to an amount equal to the filing fee that would be paid to initiate the claim in the court of general jurisdiction in the state in which you provide Services, unless a lower fee amount would be owed by you pursuant to the AAA rules or applicable law. Any dispute as to whether a cost is unique to arbitration shall be resolved by the arbitrator.
Except as provided in Federal Rule of Civil Procedure 68 or any state equivalents, each party shall pay its own attorneys’ fees and pay any costs that are not unique to the arbitration (i.e., costs that each party would incur if the claim(s) were litigated in a court such as costs to subpoena witnesses and/or documents, take depositions and purchase deposition transcripts, copy documents, etc.).
At the end of any arbitration, the arbitrator may award reasonable fees and costs or any portion thereof to you if you prevail, to the extent authorized by applicable law.
vii. The Arbitration Hearing And Award.
The Parties will arbitrate their dispute before the Arbitrator, who shall confer with the Parties regarding the conduct of the hearing and resolve any disputes the Parties may have in that regard. Within 30 days of the close of the arbitration hearing, or within a longer period of time as agreed to by the Parties or as ordered by the Arbitrator, any party will have the right to prepare, serve on the other party and file with the Arbitrator a brief. The Arbitrator may award any party any remedy to which that party is entitled under applicable law, but such remedies shall be limited to those that would be available to a party in his or her individual capacity in a court of law for the claims presented to and decided by the Arbitrator, and no remedies that otherwise would be available to an individual in a court of law will be forfeited by virtue of this Arbitration Provision. The Arbitrator will issue a decision or award in writing, stating the essential findings of fact and conclusions of law. Except as may be permitted or required by law, as determined by the Arbitrator, neither a party nor an Arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all Parties. A court of competent jurisdiction shall have the authority to enter a judgment upon the award made pursuant to the arbitration. The Arbitrator shall not have the power to commit errors of law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error.
viii. Your Right To Opt Out Of Arbitration.
Arbitration is not a mandatory condition of your contractual relationship with the Company. If you do not want to be subject to this Arbitration Provision, you may opt out of this Arbitration Provision by notifying the Company in writing of your desire to opt out of this Arbitration Provision, either by (1) sending, within 30 days of the date this Agreement is first executed by you, electronic mail to support@Tidy4Me.com, stating your name and intent to opt out of the Arbitration Provision or (2) by sending a letter by U.S. Mail, or by any nationally recognized delivery service (e.g, UPS, Federal Express, etc.), or by hand delivery to:
37437 Bayberry St,
Palmdale CA 93550.
In order to be effective, the letter under option (2) must clearly indicate your intent to opt out of this Arbitration Provision, and must be dated and signed. The envelope containing the signed letter must be received (if delivered by hand) or post-marked within 30 days of the date this Agreement is first executed by you. For sake of clarity, TIDY4ME may from time to time confirm that you still agree to this agreement, such confirmation does not extend the time to opt out. Your writing opting out of this Arbitration Provision, whether sent by (1) or (2), will be filed with a copy of this Agreement and maintained by the Company. Should you not opt out of this Arbitration Provision within the 30-day period, you and the Company shall be bound by the terms of this Arbitration Provision. You have the right to consult with counsel of your choice concerning this Arbitration Provision. You understand that you will not be subject to retaliation if you exercise your right to assert claims or opt-out of coverage under this Arbitration Provision.
- Enforcement Of This Agreement.
This Arbitration Provision is the full and complete agreement relating to the formal resolution of disputes arising out of this Agreement. Except as stated in subsection v, above, in the event any portion of this Arbitration Provision is deemed unenforceable, the remainder of this Arbitration Provision will be enforceable.
- Optional Pre-Arbitration Negotiation Process
Before initiating any arbitration or proceeding, you and TIDY4ME may agree to first attempt to negotiate any dispute, claim or controversy between the parties informally for 30 days, unless this time period is mutually extended by you and TIDY4ME. A party who intends to seek negotiation under this subsection must first send to the other a written Notice of Dispute (“Notice”). The Notice must (i) describe the nature and basis of the claim or dispute; and (ii) set forth the specific relief sought. All offers, promises, conduct and statements, whether oral or written, made in the course of the negotiation by any of the parties, their agents, employees, and attorneys are confidential, privileged and inadmissible for any purpose, including as evidence of liability or for impeachment, in arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the negotiation.
- SERVICE REQUESTER PRIVACY
Independent Homekeeper understands that in performing the Services, he or she will receive certain private and/or confidential information regarding the Service Requesters and will have access to their homes and personal belongings. Except upon order of government authority (e.g., Court, administrative agency) having jurisdiction, or upon written consent by the Service Requester, Independent Homekeeper agrees that he or she shall not publish, disseminate or disclose, for his or her own benefit or the benefit of any third party, any confidential information regarding the Service Requesters, including addresses, telephone numbers and/or financial information. Independent Homekeeper further agrees not to engage in any activity which violates the privacy of any Service Requester, including, but not limited to, taking unauthorized photographs or making unauthorized audio or video recordings of a Service Requester or his or her homes or personal belongings, or publishing, disseminating or disclosing any such photographs or recordings. Independent Homekeeper acknowledges that his/her failure to comply with the foregoing shall constitute a material breach of this Agreement.
Independent Homekeeper hereby expressly acknowledges and agrees that, by using or receiving access to the TIDY4ME Platform, Independent Homekeeper and TIDY4ME are bound by the then-current version of this Agreement, including any modifications and supplements to this Agreement or documents incorporated herein, including the Schedules below. Continued use of the TIDY4ME Platform after any modifications or supplements to the Agreement shall constitute Independent Homekeeper’s consent to such modifications and supplements. Independent Homekeeper is responsible for regularly reviewing this Agreement.
All notices, requests, consents, claims, demands, waivers, and other communications hereunder (each, a “Notice”) shall be in writing and addressed to the parties at the addresses set forth on the first and last pages of this Agreement (or to such other address that may be designated by the receiving party from time to time in accordance with this paragraph). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), facsimile, or e-mail (with confirmation of transmission), or certified or registered mail (in each case, return receipt requested, postage prepaid). This Agreement, together with any other documents incorporated herein by reference, and related exhibits, appendices, and schedules, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter. This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each party hereto, and any of the terms thereof may be waived, only by a written document signed by each party to this Agreement or, in the case of waiver, by the party or parties waiving compliance. Except as expressly provided otherwise in this Agreement, if any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. This Agreement may be executed in multiple counterparts, including by facsimile or other electronic signature, each of which shall be deemed an original and all of which together shall constitute one instrument. Headings appear solely for convenience of reference. Such headings are not part of this Agreement and shall not be used to construe it.
This Agreement may not be amended, by implication or otherwise, by any marketing material contained on TIDY4ME’s website or the TIDY4ME Platform. Nothing contained in this provision or this Agreement is intended to or shall be interpreted to create any third-party beneficiary claims.
You expressly acknowledge that you have read, understood, and taken steps to thoughtfully consider the consequences of this Agreement, that you agree to be bound by the terms and conditions of the Agreement, and that you are legally competent to enter into this Agreement with Company.
Schedule 1 – TIDY4ME Platform Fees and Payments
TIDY4ME Platform Fees
The following fees may be charged to Independent Homekeepers for the enclosed reason.
|Late Fee||$5.00 per affected Job||Arriving to a Job more than 5 minutes late, as reported by the client or confirmed by the use of the TIDY4ME software.|
|Left Early Fee||$30.00 per affected Job||Departing a Job prior to the scheduled end time, as reported by the client or confirmed by the use of the TIDY4ME software.|
|Call Out Fee||$30.00 per affected Job||Changing your schedule in a way that forces clients to reschedule or change Homekeepers with under 24 hours notice.|
|No Show Fee||$30.00 per affected Job||Not showing up to a Job, without notifying TIDY4ME prior to the start of the Job.|
|Late Reschedule Fee||$10.00 per day||Changing your schedule in a way that forces clients to reschedule or change Homekeepers with under 7 days notice.|
|Equipment Rental Fee||$2 per TIDY4ME,
$4 per TIDY4ME+, $6 per MIGHTY
|If Independent Homekeeper rents equipment from TIDY4ME, then they are charged these fee per completed Job.|
TIDY4ME Platform Service Fee (Payments)
The following payments are paid to Independent Homekeepers for the enclosed reason.
|Service Fee (Payments)||Amount||Detail|
|A Completed Gig||
The current rate at support@Tidy4Me.com
|For completing a TIDY4ME on the platform, and marking it such on the software.|
|No Access Fee||$10 per TIDY4ME,
|If you arrive at the home at the correct Start Time and make reasonable efforts to complete a Job but are unable to for any reason. Such as the Service Requester cancels at the last minute or you cannot get into the home.|
Schedule 2 – Cancellation Thresholds
TIDY4ME Client Cancellation Threshold
Within the last 30 days, if 30% or more of clients who indicate you are their Preferred Homekeeper cancel their plans with TIDY4ME, you may be deactivated.
TIDY4ME Cleaning Cancellation Threshold
You may be deactivated if you “No Show”, or do not complete a scheduled cleaning without prior notice, 2 or more times in a 180 day period. You may be deactivated if you “Call Out”, or cancel a scheduled cleaning with under 24 hours notice, 3 or more times in a 30 day period.
U.S. Department of Labor
Wage and Hour Division
Washington, D.C. 20210
Administrator’s Interpretation No. 2015-1
July 15, 2015
Issued by ADMINISTRATOR DAVID WEIL
SUBJECT: The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees Who Are Misclassified as Independent Contractors.
Misclassification of employees as independent contractors is found in an increasing number of workplaces in the United States, in part reflecting larger restructuring of business organizations. When employers improperly classify employees as independent contractors, the employees may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation. Misclassification also results in lower tax revenues for government and an uneven playing field for employers who properly classify their workers. Although independent contracting relationships can be advantageous for workers and businesses, some employees may be intentionally misclassified as a means to cut costs and avoid compliance with labor laws.
The Department of Labor’s Wage and Hour Division (WHD) continues to receive numerous complaints from workers alleging misclassification, and the Department continues to bring successful enforcement actions against employers who misclassify workers. In addition, many states have acknowledged this problematic trend and have responded with legislation and misclassification task forces. Understanding that combating misclassification requires a multi-pronged approach, WHD has entered into memoranda of understanding with many of these states, as well as the Internal Revenue Service.1 In conjunction with these efforts, the Administrator believes that additional guidance regarding the application of the standards for determining who is an employee under the Fair Labor Standards Act (FLSA or “the Act”) may be helpful to the regulated community in classifying workers and ultimately in curtailing misclassification.
The FLSA’s definition of employ as “to suffer or permit to work” and the later-developed “economic realities” test provide a broader scope of employment than the common law control test. Indeed, although the common law control test was the prevalent test for determining whether an employment relationship existed at the time that the FLSA was enacted, Congress rejected the common law control test in drafting the FLSA. See Walling v. Portland Terminal Co., 330 U.S. 148, 150-51 (1947). Instead, the FLSA defines “employ” broadly as including “to suffer or permit to work,” 29 U.S.C. 203(g), which clearly covers more workers as employees, see U.S. v. Rosenwasser, 323 U.S. 360, 362-63 (1945).
In order to make the determination whether a worker is an employee or an independent contractor under the FLSA, courts use the multi-factorial “economic realities” test, which focuses on whether the worker is economically dependent on the employer or in business for him or herself.2 A worker who is economically dependent on an employer is suffered or permitted to work by the employer. Thus, applying the economic realities test in view of the expansive definition of “employ” under the Act, most workers are employees under the FLSA. The application of the economic realities factors must be consistent with the broad “suffer or permit to work” standard of the FLSA.
This Administrator’s Interpretation first discusses the pertinent FLSA definitions and the breadth of employment relationships covered by the FLSA. When determining whether a worker is an employee or independent contractor, the application of the economic realities factors should be guided by the FLSA’s statutory directive that the scope of the employment relationship is very broad. This Administrator’s Interpretation then addresses each of the factors, providing citations to case law and examples. All of the factors must be considered in each case, and no one factor (particularly the control factor) is determinative of whether a worker is an employee. Moreover, the factors themselves should not be applied in a mechanical fashion, but with an understanding that the factors are indicators of the broader concept of economic dependence. Ultimately, the goal is not simply to tally which factors are met, but to determine whether the worker is economically dependent on the employer (and thus its employee) or is really in business for him or herself (and thus its independent contractor). The factors are a guide to make this ultimate determination of economic dependence or independence.
- The Economic Realities Factors Should Be Applied in View of the FLSA’s Broad Scope of Employment and “Suffer or Permit” Standard
The FLSA’s definitions establish the scope of the employment relationship under the Act and provide the basis for distinguishing between employees and independent contractors. The FLSA defines “employee” as “any individual employed by an employer,” 29 U.S.C. 203(e)(1), and “employer” as including “any person acting directly or indirectly in the interest of an employer in relation to an employee,” 29 U.S.C. 203(d). The FLSA’s definition of “‘employ’ includes to suffer or permit to work.” 29 U.S.C. 203(g). This “suffer or permit” concept has broad applicability and is critical to determining whether a worker is an employee and thus entitled to the Act’s protections.
The “suffer or permit” standard was specifically designed to ensure as broad of a scope of statutory coverage as possible. See Rosenwasser, 323 U.S. at 362-63 (“A broader or more comprehensive coverage of employees . . . would be difficult to frame.”);Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (“employ” is defined with “striking breadth”). The Supreme Court “has consistently construed the Act ‘liberally to apply to the furthest reaches consistent with congressional direction,’ recognizing that broad coverage is essential to accomplish the [Act’s] goal . . . .” Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 296 (1985) (quoting Mitchell v. Lublin, McGaughy & Assocs., 358 U.S. 207, 211 (1959)) (internal citation omitted).
The history of the “suffer or permit” standard highlights its broad applicability. Prior to the FLSA’s enactment, the phrase “suffer or permit” (or variations of the phrase) was commonly used in state laws regulating child labor and was “designed to reach businesses that used middlemen to illegally hire and supervise children.” Antenor v. D & S Farms, 88 F.3d 925, 929 n.5 (11th Cir. 1996). A key rationale underlying the “suffer or permit” standard in child labor laws was that the employer’s opportunity to detect work being performed illegally and the ability to prevent it from occurring was sufficient to impose liability on the employer. See, e.g., People ex rel. Price v. Sheffield Farms-Slawson-Decker Co., 225 N.Y. 25, 29-31 (N.Y. 1918). Thus, extending coverage of child labor laws to those who suffered or permitted the work was designed to expand child labor laws’ coverage beyond those who controlled the child laborer, counter an employer’s argument that it was unaware that children were working, and prevent employers from using agents to evade requirements.
Unlike the common law control test, which analyzes whether a worker is an employee based on the employer’s control over the worker and not the broader economic realities of the working relationship, the “suffer or permit” standard broadens the scope of employment relationships covered by the FLSA. Indeed, the FLSA’s statutory definitions (including “suffer or permit”) rejected the common law control test that was prevalent at the time. As the Supreme Court explained:
[I]n determining who are “employees” under the Act, common law employee categories or employer-employee classifications under other statutes are not of controlling significance. This Act contains its own definitions, comprehensive enough to require its application to many persons and working relationships, which prior to this Act, were not deemed to fall within an employer-employee category.
Walling, 330 U.S. at 150-51 (internal citation omitted); see also Darden, 503 U.S. at 326 (FLSA’s “suffer or permit” standard for employment “stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles.”); Antenor, 88 F.3d at 933 (“Indeed, the ‘suffer or permit to work’ standard was developed to assign responsibility to businesses that did not directly supervise putative employees.”). Thus, the scope of employment under the FLSA is the “‘broadest definition that has ever been included in any one act.’” Rosenwasser, 323 U.S. at 363 n.3 (quoting from statement of Senator Black on Senate floor).
An “entity ‘suffers or permits’ an individual to work if, as a matter of economic reality, the individual is dependent on the entity.”Antenor, 88 F.3d at 929. The Supreme Court and Circuit Courts of Appeals have developed a multi-factor “economic realities” test to determine whether a worker is an employee or an independent contractor under the FLSA. See, e.g., Tony & Susan Alamo, 471 U.S. at 301 (noting that the test of employment under the FLSA is economic reality); Goldberg v. Whitaker House Co-op, Inc., 366 U.S. 28, 33 (1961) (the economic realities of the worker’s relationship with the employer control, rather than any technical concepts used to characterize that relationship). The factors typically include: (A) the extent to which the work performed is an integral part of the employer’s business; (B) the worker’s opportunity for profit or loss depending on his or her managerial skill; (C) the extent of the relative investments of the employer and the worker; (D) whether the work performed requires special skills and initiative; (E) the permanency of the relationship; and (F) the degree of control exercised or retained by the employer.4
In undertaking this analysis, each factor is examined and analyzed in relation to one another, and no single factor is determinative. The “control” factor, for example, should not be given undue weight. The factors should be considered in totality to determine whether a worker is economically dependent on the employer, and thus an employee. The factors should not be applied as a checklist, but rather the outcome must be determined by a qualitative rather than a quantitative analysis. The application of the economic realities factors is guided by the overarching principle that the FLSA should be liberally construed to provide broad coverage for workers, as evidenced by the Act’s defining “employ” as “to suffer or permit to work.”
In applying the economic realities factors, courts have described independent contractors as those workers with economic independence who are operating a business of their own. On the other hand, workers who are economically dependent on the employer, regardless of skill level, are employees covered by the FLSA. See, e.g., Hopkins v. Cornerstone Am., 545 F.3d 338, 343 (5th Cir. 2008) (“To determine if a worker qualifies as an employee, we focus on whether, as a matter of economic reality, the worker is economically dependent upon the alleged employer or is instead in business for himself.”); Baker v. Flint Eng’g & Constr. Co., 137 F.3d 1436, 1440 (10th Cir. 1998) (the economic realities of the relationship govern, and the focal point is whether the individual is economically dependent on the business to which he renders service or is, as a matter of economic fact, in business for himself); Brock v. Superior Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988) (“The ultimate concern is whether, as a matter of economic reality, the workers depend on someone else’s business . . . or are in business for themselves.”). “Ultimately, in considering economic dependence, the court focuses on whether an individual is ‘in business for himself’ or is ‘dependent upon finding employment in the business of others.’” Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1312 (11th Cir. 2013) (quotingMednick v. Albert Enters., Inc., 508 F.2d 297, 301-02 (5th Cir. 1975)).
Moreover, the economic realities of the relationship, and not the label an employer gives it, are determinative. Thus, an agreement between an employer and a worker designating or labeling the worker as an independent contractor is not indicative of the economic realities of the working relationship and is not relevant to the analysis of the worker’s status. See, e.g., Scantland, 721 F.3d at 1311 (“This inquiry is not governed by the ‘label’ put on the relationship by the parties or the contract controlling that relationship, but rather focuses on whether ‘the work done, in its essence, follows the usual path of an employee.’”) (quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947)); Superior Care, 840 F.2d at 1059 (“[E]mployer’s self-serving label of workers as independent contractors is not controlling.”); Robicheaux v. Radcliff Material, Inc., 697 F.2d 662, 667 (5th Cir. 1983) (explaining that “[a]n employee is not permitted to waive employee status,” and affirming that welders were employees despite having signed independent contractor agreements). Likewise, workers who are classified as independent contractors may receive a Form 1099-MISC from their employers. This form simply indicates that the employer engaged the worker as an independent contractor, not that the worker is actually an independent contractor under the FLSA. See Olson v. Star Lift Inc., 709 F. Supp. 2d 1351, 1356 (S.D. Fla. 2010) (worker’s receipt of Form 1099-MISC from employer does not weigh in favor of independent contractor status). “Economic realities, not contractual labels, determine employment status for the remedial purposes of the FLSA.” Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 755 (9th Cir. 1979).
The ultimate inquiry under the FLSA is whether the worker is economically dependent on the employer or truly in business for him or herself. If the worker is economically dependent on the employer, then the worker is an employee. If the worker is in business for him or herself (i.e., economically independent from the employer), then the worker is an independent contractor.
- The Economic Realities Factors Guide the Determination Whether the Worker Is Truly an Independent Business or Is Economically Dependent on the Employer
To help illustrate how the economic realities factors should be properly used to determine whether a worker is truly in business for him or herself, each factor is discussed in detail below. The distinction between workers who are economically dependent on employers and the narrower subset of workers who are truly independent businesspersons must not be eclipsed by a mechanical application of the economic realities test. The analysis whether the factors are met must focus on whether the worker is economically dependent on the employer or truly in business for him or herself. As a district court held in an enforcement action by the Department:
These factors are to be considered and weighed against one another in each situation, but there is no mechanical formula for using them to arrive at the correct result. Rather, the factors are simply a tool to assist in understanding individual cases, with the ultimate goal of deciding whether it is economically realistic to view a relationship as one of employment or not.
Solis v. Cascom, Inc., 2011 WL 10501391, at *4 (S.D. Ohio Sept. 21, 2011); see also Scantland, 721 F.3d at 1312 (the economic realities factors “serve as guides, [and] the overarching focus of the inquiry is economic dependence”); Usery v. Pilgrim Equip. Co., Inc., 527 F.2d 1308, 1311 (5th Cir. 1976) (The economic realities factors “are aids—tools to be used to gauge the degree of dependence of alleged employees on the business with which they are connected. It is dependence that indicates employee status. Each test must be applied with that ultimate notion in mind.”).
Each factor of the economic realities test is discussed below in order to highlight, using case law and examples, relevant considerations for each factor and how each suggests whether or not there is an employment relationship.
- Is the Work an Integral Part of the Employer’s Business?
The policy behind the “suffer or permit” statutory language was to bring within the scope of employment workers integrated into an employer’s business. If the work performed by a worker is integral to the employer’s business, it is more likely that the worker is economically dependent on the employer. See Rutherford, 331 U.S. at 729 (workers were employees in part because work was “part of the integrated unit of production”); Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376, 1385 (3d Cir. 1985) (“workers are more likely to be ‘employees’ under the FLSA if they perform the primary work of the alleged employer”). A true independent contractor’s work, on the other hand, is unlikely to be integral to the employer’s business.5
Courts have found the “integral” factor to be compelling. See, e.g., Dole v. Snell, 875 F.2d 802, 811 (10th Cir. 1989) (holding that work performed by cake decorators “is obviously integral” to the business of selling cakes which are custom decorated); Sec’y of Labor v. Lauritzen, 835 F.2d 1529, 1537-38 (7th Cir. 1987) (“It does not take much of a record to demonstrate that picking the pickles is a necessary and integral part of the pickle business . . . .”). Work can be integral to a business even if the work is just one component of the business and/or is performed by hundreds or thousands of other workers. For example, a worker answering calls at a call center along with hundreds of others is performing work that is integral to the call center’s business even if that worker’s work is the same as and interchangeable with many others’ work. Moreover (and especially considering developments such as telework and flexible work schedules, for example), work can be integral to an employer’s business even if it is performed away from the employer’s premises, at the worker’s home, or on the premises of the employer’s customers.
Example:For a construction company that frames residential homes, carpenters are integral to the employer’s business because the company is in business to frame homes, and carpentry is an integral part of providing that service.
In contrast, the same construction company may contract with a software developer to create software that, among other things, assists the company in tracking its bids, scheduling projects and crews, and tracking material orders. The software developer is performing work that is not integral to the construction company’s business, which is indicative of an independent contractor.
- Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss?
In considering whether a worker has an opportunity for profit or loss, the focus is whether the worker’s managerial skill can affect his or her profit and loss.7 A worker in business for him or herself faces the possibility to not only make a profit, but also to experience a loss. The worker’s managerial skill will often affect opportunity for profit or loss beyond the current job, such as by leading to additional business from other parties or by reducing the opportunity for future work. For example, a worker’s decisions to hire others, purchase materials and equipment, advertise, rent space, and manage time tables may reflect managerial skills that will affect his or her opportunity for profit or loss beyond a current job.
On the other hand, the worker’s ability to work more hours and the amount of work available from the employer have nothing to do with the worker’s managerial skill and do little to separate employees from independent contractors—both of whom are likely to earn more if they work more and if there is more work available. See Scantland, 721 F.3d at 1316-17 (“Plaintiffs’ opportunity for profit was largely limited to their ability to complete more jobs than assigned, which is analogous to an employee’s ability to take on overtime work or an efficient piece-rate worker’s ability to produce more pieces.”). The effect on one’s earnings of doing one’s job well or working more hours is no different for an independent contractor than it is for an employee. Those considerations are not the product of exercising managerial skill and do not demonstrate that the worker is an independent contractor. As one court said:
There was no opportunity for increased profit or loss depending upon an alleged employee’s managerial skill. While the alleged employees were free to work additional hours to increase their income, they had no decisions to make regarding routes, or acquisition of materials, or any facet normally associated with the operation of an independent business.
Cascom, 2011 WL 10501391, at *6; see also Scantland, 721 F.3d at 1317 (“An individual’s ability to earn more by being more technically proficient is unrelated to an individual’s ability to earn or lose profit via his managerial skill, and it does not indicate that he operates his own business.”); Martin v. Selker Bros., Inc., 949 F.2d 1286, 1294 (3d Cir. 1991) (opportunity for profit or loss must depend on managerial skills to indicate independent contractor status); Snell, 875 F.2d at 810 (cake decorators’ “earnings did not depend upon their judgment or initiative, but on the [employer’s] need for their work”).8
Consistent with determining whether the worker is in business for him or herself, it is important not to overlook whether there is an opportunity for loss, as a worker truly in business for him or herself faces the possibility of experiencing a loss. See, e.g., Snell, 875 F.2d at 810 (possibility of loss is a risk usually associated with independent contractor status, but there was no way for cake decorators to experience a loss, and possible reduction in earnings was not the same as a loss); Lauritzen, 835 F.2d at 1536 (migrant farm workers had no possibility for loss of investment, only loss of wages, indicating that they were employees). In sum, in order to inform the determination of whether the worker is in business for him or herself, this factor should not focus on the worker’s ability to work more hours, but rather on whether the worker exercises managerial skills and whether those skills affect the worker’s opportunity for both profit and loss.
Example: A worker provides cleaning services for corporate clients. The worker performs assignments only as determined by a cleaning company; he does not independently schedule assignments, solicit additional work from other clients, advertise his services, or endeavor to reduce costs. The worker regularly agrees to work additional hours at any time in order to earn more. In this scenario, the worker does not exercise managerial skill that affects his profit or loss. Rather, his earnings may fluctuate based on the work available and his willingness to work more. This lack of managerial skill is indicative of an employment relationship between the worker and the cleaning company.
In contrast, a worker provides cleaning services for corporate clients, produces advertising, negotiates contracts, decides which jobs to perform and when to perform them, decides to hire helpers to assist with the work, and recruits new clients. This worker exercises managerial skill that affects his opportunity for profit and loss, which is indicative of an independent contractor.
- How Does the Worker’s Relative Investment Compare to the Employer’s Investment?
Courts also consider the nature and extent of the relative investments of the employer and the worker in determining whether the worker is an independent contractor in business for him or herself. The worker should make some investment (and therefore undertake at least some risk for a loss) in order for there to be an indication that he or she is an independent business. An independent contractor typically makes investments that support a business as a business beyond any particular job. The investment of a true independent contractor might, for example, further the business’s capacity to expand, reduce its cost structure, or extend the reach of the independent contractor’s market.
Even if the worker has made an investment, it should not be considered in isolation; it is the relative investments that matter. Looking not just to the nature of the investment, but also comparing the worker’s investment to the employer’s investment helps determine whether the worker is an independent business. If so, the worker’s investment should not be relatively minor compared with that of the employer. If the worker’s investment is relatively minor, that suggests that the worker and the employer are not on similar footings and that the worker may be economically dependent on the employer.
For example, investing in tools and equipment is not necessarily a business investment or a capital expenditure that indicates that the worker is an independent contractor. See Snell, 875 F.2d at 810 (citing cases); Lauritzen, 835 F.2d at 1537. Instead, the tools and equipment may simply be necessary to perform the specific work for the employer. Even if the investment is possibly a business investment, the worker’s investment must be significant in nature and magnitude relative to the employer’s investment in its overall business to indicate that the worker is an independent businessperson. The Tenth Circuit determined, for example, that rig welders’ investments in equipped trucks costing between $35,000 and $40,000 did not indicate that the rig welders were independent contractors when compared to the employer’s investment in its business. See Baker, 137 F.3d at 1442 (comparing rig welders’ investment to employer’s “hundreds of thousands of dollars of equipment at each work site”); see also Snell, 875 F.2d at 810-11 (comparing cake decorators’ $400 investment in their tools to employers’ business investments, including paying for rent, advertising, operating expenses, and labor, in addition to supplies and decorating equipment); Lauritzen, 835 F.2d at 1537 (reasoning that where workers provided their own gloves, and the employer provided the farm equipment, land, seed, fertilizers, and living quarters, their work was not independent of the employer); Hopkins, 545 F.3d at 344 (comparing each worker’s individual investment to employer’s overall investment in the business); Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 755 (9th Cir. 1979) (strawberry growers’ investment in light equipment, including hoes, shovels, and picking carts was “minimal in comparison” with employer’s total investment in land and heavy machinery).
An analysis of the workers’ investment, even if that investment is substantial, without comparing it to the employer’s investment is not faithful to the ultimate determination of whether the worker is truly an independent business.9 Moreover, an analysis that compares the worker’s investment to the employer’s investment—but only to the employer’s investment in the particular job performed by the worker—likewise disregards the ultimate determination by examining only a piece of the employer’s business for the comparison.
Example: A worker providing cleaning services for a cleaning company is issued a Form 1099-MISC each year and signs a contract stating that she is an independent contractor. The company provides insurance, a vehicle to use, and all equipment and supplies for the worker. The company invests in advertising and finding clients. The worker occasionally brings her own preferred cleaning supplies to certain jobs. In this scenario, the relative investment of the worker as compared to the employer’s investment is indicative of an employment relationship between the worker and the cleaning company. The worker’s investment in cleaning supplies does little to further a business beyond that particular job.
A worker providing cleaning services receives referrals and sometimes works for a local cleaning company. The worker invests in a vehicle that is not suitable for personal use and uses it to travel to various worksites. The worker rents her own space to store the vehicle and materials. The worker also advertises and markets her services and hires a helper for larger jobs. She regularly (as opposed to on a job-by-job basis) purchases material and equipment to provide cleaning services and brings her own equipment (vacuum, mop, broom, etc.) and cleaning supplies to each worksite. Her level of investments is similar to the investments of the local cleaning company for whom she sometimes works. These types of investments may be indicative of an independent contractor.
- Does the Work Performed Require Special Skill and Initiative?
A worker’s business skills, judgment, and initiative, not his or her technical skills, will aid in determining whether the worker is economically independent. “[T]he fact that workers are skilled is not itself indicative of independent contractor status.” Superior Care, 840 F.2d at 1060. Even specialized skills do not indicate that workers are in business for themselves, especially if those skills are technical and used to perform the work. See id. Accordingly, the conclusion that the skills of installing cable are indicative of independent contractor status because the skills are “akin to those of carpenters, construction workers, and electricians, who are usually considered independent contractors,” Mid-Atlantic Installation, 16 Fed. App’x at 107, overlooks whether the worker is exercising business skills, judgment, or initiative. The technical skills of cable installers, carpenters, construction workers, and electricians, for example, even assuming that they are special,10 are not themselves indicative of any independence or business initiative. See Selker Bros., 949 F.2d at 1295 (“the use of special skills is not itself indicative of independent contractor status, especially if the workers do not use those skills in any independent way”); Superior Care, 840 F.2d at 1060 (for skills to be indicative of independent contractor status, they should be used in some independent way, such as demonstrating business-like initiative);Express Sixty-Minutes, 161 F.3d at 305 (efficiency in performing work is not initiative indicative of independent contractor status);Lauritzen, 835 F.2d at 1537 (“Skills are not the monopoly of independent contractors.”). Only carpenters, construction workers, electricians, and other workers who operate as independent businesses, as opposed to being economically dependent on their employer, are independent contractors.
Example: A highly skilled carpenter provides carpentry services for a construction firm; however, such skills are not exercised in an independent manner. For example, the carpenter does not make any independent judgments at the job site beyond the work that he is doing for that job; he does not determine the sequence of work, order additional materials, or think about bidding the next job, but rather is told what work to perform where. In this scenario, the carpenter, although highly-skilled technically, is not demonstrating the skill and initiative of an independent contractor (such as managerial and business skills). He is simply providing his skilled labor.
In contrast, a highly skilled carpenter who provides a specialized service for a variety of area construction companies, for example, custom, handcrafted cabinets that are made-to-order, may be demonstrating the skill and initiative of an independent contractor if the carpenter markets his services, determines when to order materials and the quantity of materials to order, and determines which orders to fill.
- Is the Relationship between the Worker and the Employer Permanent or Indefinite?
Permanency or indefiniteness in the worker’s relationship with the employer suggests that the worker is an employee. After all, a worker who is truly in business for him or herself will eschew a permanent or indefinite relationship with an employer and the dependence that comes with such permanence or indefiniteness. Most workers are engaged on a permanent or indefinite basis (for example, the typical at-will employee). Even if the working relationship lasts weeks or months instead of years, there is likely some permanence or indefiniteness to it as compared to an independent contractor, who typically works one project for an employer and does not necessarily work continuously or repeatedly for an employer. See, e.g., DialAmerica Mktg., 757 F.2d at 1384-85 (correcting district court for ignoring fact that workers worked continuously for the employer and that such evidence indicates that workers were employees); Cascom, 2011 WL 10501391, at *6 (workers who “worked until they quit or were terminated” had relationship “similar to an at-will employment arrangement”).
However, a lack of permanence or indefiniteness does not automatically suggest an independent contractor relationship, and the reason for the lack of permanence or indefiniteness should be carefully reviewed to determine if the reason is indicative of the worker’s running an independent business. As the Second Circuit noted, neither working for other employers nor not relying on the employer as his or her primary source of income transform the worker into the employer’s independent contractor. See Superior Care, 840 F.2d at 1060. The key is whether the lack of permanence or indefiniteness is due to “operational characteristics intrinsic to the industry” (for example, employers who hire part-time workers or use staffing agencies11) or the worker’s “own business initiative.” Id. at 1060-61 (“the fact that these nurses are a transient work force reflects the nature of their profession and not their success in marketing their skills independently”); see also Mr. W Fireworks, 814 F.2d at 1054 (“We thus hold that when an industry is seasonal, the proper test for determining permanency of the relationship is not whether the alleged employees returned from season to season, but whether the alleged employees worked for the entire operative period of a particular season.”). A worker’s lack of a permanent or indefinite relationship with an employer is indicative of independent contractor status if it results from the worker’s own independent business initiative. See Superior Care, 840 F.2d at 1060-61.
Example:12 An editor has worked for an established publishing house for several years. Her edits are completed in accordance with the publishing house’s specifications, using its software. She only edits books provided by the publishing house. This scenario indicates a permanence to the relationship between the editor and the publishing house that is indicative of an employment relationship.
Another editor has worked intermittently with fifteen different publishing houses over the past several years. She markets her services to numerous publishing houses. She negotiates rates for each editing job and turns down work for any reason, including because she is too busy with other editing jobs. This lack of permanence with one publishing house is indicative of an independent contractor relationship.
- What is the Nature and Degree of the Employer’s Control?
As with the other economic realities factors, the employer’s control should be analyzed in light of the ultimate determination whether the worker is economically dependent on the employer or truly an independent businessperson. The worker must control meaningful aspects of the work performed such that it is possible to view the worker as a person conducting his or her own business. See Scantland, 721 F.3d at 1313 (“‘Control is only significant when it shows an individual exerts such a control over a meaningful part of the business that she stands as a separate economic entity.’”) (quoting Pilgrim Equip., 527 F.2d at 1312-13); Baker, 137 F.3d at 1441. And the worker’s control over meaningful aspects of the work must be more than theoretical—the worker must actually exercise it. See, e.g., Snell, 875 F.2d at 808; Mr. W Fireworks, 814 F.2d at 1047 (“it is not what the operators could have done that counts, but as a matter of economic reality what they actually do that is dispositive”) (emphases in original).
For example, an employer’s lack of control over workers is not particularly telling if the workers work from home or offsite. As the Third Circuit explained in DialAmerica Marketing, the fact that the workers could control the hours during which they worked and that they were subject to little direct supervision was unsurprising given that such facts are typical of homeworkers and thus largely insignificant in determining their status. See 757 F.2d at 1384 (“The district court therefore misapplied and overemphasized the right-to-control factor in its analysis.”); see also Superior Care, 840 F.2d at 1060 (“An employer does not need to look over his workers’ shoulders every day in order to exercise control.”); Antenor, 88 F.3d at 933 (The “courts have found economic dependence under a multitude of circumstances where the alleged employer exercised little or no control or supervision over the putative employees.”). Moreover, workers’ control over the hours when they work is not indicative of independent contractor status. See, e.g., Snell, 875 F.2d at 806 (“Of course, flexibility in work schedules is common to many businesses and is not significant in and of itself.”); Doty v. Elias, 733 F.2d 720, 723 (10th Cir. 1984) (“A relatively flexible work schedule alone, however, does not make an individual an independent contractor rather than an employee.”).
Technological advances and enhanced monitoring mechanisms may encourage companies to engage workers not as employees yet maintain stringent control over aspects of the workers’ jobs, from their schedules, to the way that they dress, to the tasks that they carry out. Some employers assert that the control that they exercise over workers is due to the nature of their business, regulatory requirements, or the desire to ensure that their customers are satisfied. However, control exercised over a worker, even for any or all of those reasons, still indicates that the worker is an employee. As the Eleventh Circuit explained:
[The employer] also argues that its quality control measures and regulation of schedules stemmed from “the nature of the business” and are therefore not the type of control that is relevant to the economic dependence inquiry. We disagree. The economic reality inquiry requires us to examine the nature and degree of the alleged employer’s control, not why the alleged employer exercised such control. Business needs cannot immunize employers from the FLSA’s requirements. If the nature of a business requires a company to exert control over workers to the extent that [the employer] has allegedly done, then that company must hire employees, not independent contractors.
Scantland, 721 F.3d at 1316. Thus, the nature and degree of the employer’s control must be examined as part of determining the ultimate question whether the worker is economically dependent on the employer.
Finally, the “control” factor should not play an oversized role in the analysis of whether a worker is an employee or an independent contractor. All possibly relevant factors should be considered, and cases must not be evaluated based on the control factor alone.See, e.g., Superior Care, Inc., 840 F.2d at 1059 (“No one of these factors is dispositive; rather, the test is based on a totality of the circumstances.”). As discussed above, the FLSA’s statutory definitions (including “suffer or permit”) rejected the common law control test for determining employment that was prevalent at the time. See Walling, 330 U.S. at 150-51; Darden, 503 U.S. at 326. Indeed, the FLSA covers workers of an employer even if the employer does not exercise the requisite control over the workers, assuming the workers are economically dependent on the employer. The control factor should not overtake the other factors of the economic realities test, and like the other factors, it should be analyzed in the context of ultimately determining whether the worker is economically dependent on the employer or an independent business.
Example: A registered nurse who provides skilled nursing care in nursing homes is listed with Beta Nurse Registry in order to be matched with clients. The registry interviewed the nurse prior to her joining the registry, and also required the nurse to undergo a multi-day training presented by Beta. Beta sends the nurse a listing each week with potential clients and requires the nurse to fill out a form with Beta prior to contacting any clients. Beta also requires that the nurse adhere to a certain wage range and the nurse cannot provide care during any weekend hours. The nurse must inform Beta if she is hired by a client and must contact Beta if she will miss scheduled work with any client. In this scenario, the degree of control exercised by the registry is indicative of an employment relationship.
Another registered nurse who provides skilled nursing care in nursing homes is listed with Jones Nurse Registry in order to be matched with clients. The registry sends the nurse a listing each week with potential clients. The nurse is free to call as many or as few potential clients as she wishes and to work for as many or as few as she wishes; the nurse also negotiates her own wage rate and schedule with the client. In this scenario, the degree of control exercised by the registry is not indicative of an employment relationship.
In sum, most workers are employees under the FLSA’s broad definitions. The very broad definition of employment under the FLSA as “to suffer or permit to work” and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor. The factors should not be analyzed mechanically or in a vacuum, and no single factor, including control, should be over-emphasized. Instead, each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee). The factors should be used as guides to answer that ultimate question of economic dependence. The correct classification of workers as employees or independent contractors has critical implications for the legal protections that workers receive, particularly when misclassification occurs in industries employing low wage workers.
1 Information about the Department’s Misclassification Initiative and related memoranda of understanding is available athttp://www.dol.gov/whd/workers/misclassification/.
2 While most misclassified employees are labeled “independent contractors,” the Department has seen an increasing number of instances where employees are labeled something else, such as “owners,” “partners,” or “members of a limited liability company.” In these instances, the determination of whether the workers are in fact FLSA covered employees is also made by applying an economic realities analysis.
3 The analysis in this Administrator’s Interpretation should also be applied in determining whether a worker is an employee or an independent contractor in cases arising under the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) and the Family and Medical Leave Act (FMLA). MSPA expressly adopts the FLSA’s definition of “employ” as MSPA’s definition of “employ” and thus incorporates the broad “suffer or permit” standard for determining the scope of employment relationships. See 29 U.S.C. 1802(5) (“The term ‘employ’ has the meaning given such term under [the FLSA, 29 U.S.C. 203(g)].”); see also 29 C.F.R. 500.20(h)(1)-(4). The FMLA also adopts the FLSA’s definition of “employ” for employer coverage and employee eligibility purposes (subject to additional eligibility requirements). See 29 U.S.C. 2611(3); 29 C.F.R. 825.105.
4 The number of factors and the exact articulation of the factors may vary some depending on the court. Courts routinely note that they may consider additional factors depending on the circumstances and that no one factor is determinative.
5 Given that the “integral” factor particularly encompasses the “suffer or permit” standard and that the Supreme Court in Rutherfordfound the workers in that case to be employees, in part because they were “part of the integrated unit of production,” whether the worker’s work is an integral part of the employer’s business should always be analyzed in misclassification cases. Although a few courts, such as the Fifth Circuit, do not include the “integral” factor in their recitation of the factors that comprise the economic realities test, they nonetheless recognize that the factors comprising the test are not exclusive. See, e.g., Cromwell v. Driftwood Elec. Contractors, Inc., 348 Fed. App’x 57, 59 (5th Cir. 2009) (describing the five factors it identifies as “non-exhaustive”); Brock v. Mr. W Fireworks, Inc., 814 F.2d 1042, 1043 (5th Cir. 1987) (same).
6 The addition or alteration of any of the facts in any of the examples could change the resulting analysis. Additionally, while the examples help illustrate the discussion of several common factors of the economic realities test, no one factor is determinative of whether a worker is an employee or independent contractor.
7 This factor is sometimes articulated as “the degree to which the worker’s opportunity for profit and loss is determined by the alleged employer,” Herman v. Express Sixty-Minutes Delivery Serv., Inc., 161 F.3d 299, 303 (5th Cir. 1998), or simply as “the worker’s opportunity for profit or loss,” Baker, 137 F.3d at 1440. This factor should not focus, however, just on whether there is opportunity for profit or loss, but rather on whether the worker has the ability to make decisions and use his or her managerial skill and initiative to affect opportunity for profit or loss.
8 In Chao v. Mid-Atlantic Installation Servs., Inc., 16 Fed. App’x 104, 106-07 (4th Cir. 2001), the Fourth Circuit identified “the business acumen with which the Installer makes his required capital investments in tools, equipment, and a truck” and the “decision whether to hire his own employees or to work alone” as indicative of the managerial skill that suggests independent contractor status. The court also identified the workers’ skill in meeting technical specifications and their ability to control earnings by working more or fewer hours as indicative of managerial skill. Id.; see also Express Sixty-Minutes, 161 F.3d at 304 (relying on workers’ “ability to choose how much they wanted to work” as indicative of managerial skill). These latter considerations do not helpfully distinguish between workers who are in business for themselves and those who are economically dependent on the employer.
9 Cf. Mid-Atlantic Installation, 16 Fed. App’x at 107 (analyzing workers’ investment without comparing it to employer’s investment);Freund v. Hi-Tech Satellite, Inc., 185 Fed. App’x 782, 783-84 (11th Cir. 2006) (same).
10 A district court determined that the cable installation at issue in that case “did not require a special skill” and could be learned by workers with no experience in the field after six weeks of training. Cascom, 2011 WL 10501391, at *6; see also Scantland, 721 F.3d at 1318 (cable installers admitted that they were skilled workers; however, “[t]he meaningfulness of this skill as indicating that [they] were in business for themselves or economically independent . . . is undermined by the fact that [the employer] provided most [of them] with their skills”); Keller v. Miri Microsystems LLC, 781 F.3d 799, 809-810 (6th Cir. 2015) (denying summary judgment and contrasting carpenters, who have “unique skill, craftsmanship, and artistic flourish,” with cable technicians who do not need “unique skills” but rather are selected on the basis of availability and location).
11 See, e.g., Solis v. A+ Nursetemps, Inc., 2013 WL 1395863, at *7 (M.D. Fla. Apr. 5, 2013) (holding that nurses were employees of a temporary health care staffing agency; although nurses “enjoy[ed] a degree of flexibility . . . not shared by many in the work force,” had “an enhanced ability to ‘moonlight’ by working for more than one [staffing] agency at a time,” and had some flexibility in choosing “when and where to make themselves available for work,” the court concluded that when the nurses were working on assignment for the staffing agency they were, during those work weeks, its employees).
12 This factor helps illustrate how no one factor alone is determinative of the economic realities of the relationship between a worker and an employer and how it can be difficult to isolate one factor. Here, the example necessarily includes relevant facts beyond just the permanence or indefiniteness of the editors’ relationships with the publishing houses to illustrate the existence, or not, of an employment relationship.