Friday, April 12, 2019

Off-Duty Police Officers are Employees, Not Independent Contractors

Off-Duty Police Officers are Employees, Not Independent Contractors

In a decision of the Sixth Circuit Court of Appeals issued in February, it was determined that the individuals who work for Off-Duty Police Services, Inc., which employed both sworn police officers as well as civilians, were not independent contractors but rather employees protected by the Fair Labor Standards Act, including the requirement for the paying of overtime. Acosta v. Off-Duty Police Services, Inc., 915 F.3d 1050 (6th Cir. 2019).  

In this case, the Department of Labor brought an action alleging that the employees of Off-Duty Police Services, Inc. (“ODPS”) had been mischaracterized as independent contractors where in fact they are employees. After a bench trial, Judge Hale had held that the sworn officer workers were independent contractors while the civilians were employees. Slip op. at 4.  On appeal, the determination that the unsworn employees were to be classified as employees was upheld, but the determination with respect to the sworn officers was rejected. Rather, the Sixth Circuit would hold that even the sworn officers were employees of ODPS. This determination was made notwithstanding the fact that all of the individuals at issue had signed agreements acknowledging that they were independent contractors. The Sixth  Circuit applied a “economic reality test” set forth in Keller v. Miri Microsystems LLC, 781 F.3d 799, 807 (6th Cir. 2015), that looks at:
  • the permanency of the relationship between the parties;
  • the degree of skill required for the services provided;
  • the worker’s investment in equipment or materials for their tasks;
  • the worker’s opportunity for profit or loss based upon skill level;
  • the degree the company has the right to control how the work is performed; and
  • whether the services provided are an integral part of the company’s business.
Applying these factors, the court found that many of the employees had been with OPDS for significant amount of time, in certain instances decades. The work required did not involve a high degree of skill, including, for example, sitting in a police car with the lights flashing or traffic direction. While those employees who were not sworn police officers who did not have access to a police vehicle were required to purchase an equivalent vehicle (typically a Crown Victoria), the amount invested was $3000 to $5000. While some of the employees did have to make an investment in equipment, this was minimal compared to the overall expenses of running the company. There existed no opportunity for profit or loss based upon the application of various skills. Rather, the persons were typically compensated on an hourly basis, and irrespective of any skill, there was no way to complete the work in less than the allotted time. The company had the right to oversee how the employees were performing. Notwithstanding the fact that some workers reported that they had never been supervised on-site, the Sixth Circuit emphasized that it is the ability to exercise supervision, rather than the fact of having exercise that capacity, that controlled. Last, the services of provided by the workers were integral to the ODPS business model.
On that basis, it was determined that all of the workers of ODPS, irrespective of whether sworn or not, were to be classified as employees. As such, they are entitled to back claims for overtime and other protections afforded by employee status.
           In addition, the Sixth Circuit reversed the determination that the company had failed to maintain books and records as required by the FLSA.

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