Monday, March 30, 2015

6th Circuit deals blow to independent contractors

TheCableGuyHave you ever had the cable guy show up to your house, only to see the name of some random LLC on the side of his work truck? Many cable companies use the services of “independent contractor” installers. But, are those installers truly “independent contractors,” or are they employees of the cable company? According to the 6th Circuit, in Keller v. Miri Microsystems LLC (3/26/15) [pdf], the answer is likely the latter.

In examining whether the plaintiff satellite dish installer was an employee or contractor, the court applied the six-factored “economic realities” test:

  1. the permanency of the relationship between the parties;
  2. the degree of skill required for the rendering of the services;
  3. the worker’s investment in equipment or materials for the task;
  4. the worker’s opportunity for profit or loss, depending upon his skill;
  5. the degree of the alleged employer’s right to control the manner in which the work is performed; and
  6. whether the service rendered is an integral part of the alleged employer’s business.

The majority applied a fact-based analysis to conclude that there were too many facts in dispute to make a legal determination on the issue. The dissent, however, took a more common-sense approach to the issue:

Despite our cataloging of the various factors that inform our decision, in the end we must take a common sense approach and look at the situation in its entirety. What does that show? Miri [the plaintiff’s single-member LLC] served as a middleman in the satellite installation business. The LLC had a single member: Anthony Miri. Its business plan was to work with individuals such as plaintiff who carry out the actual installations. Miri does not provide benefits to these individuals or withhold taxes. Nor does it enter into an employment contract with them. Plaintiff moved from providing installation services for another middleman, to Miri, and later to HugesNet directly, and provided additional products and services to customers directly while doing installations for Miri. It seems abundantly clear that both plaintiff and Miri intended that plaintiff be an independent contractor and conducted themselves accordingly. It is not clear what more the parties could have done that would have satisfied the Majority that plaintiff was an independent contractor.

What does all this mean? It is very difficult to establish, as a matter of law, that a worker is an independent contractor. Unless you want a jury deciding this complex issue, err on the side of “employee” unless it is abundantly clear that the worker is an independent contractor under the above six-factored test.

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