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App-based drivers: Jury
will decide
whether employees or contractors |
Walsh v. Alpha & Omega
USA (8th Cir 07/14/2022)
http://case.lawmemo.com/8/walsh.pdf
Sent to Custom Alerts™
subscribers on 07/16/2022
The U.S. Secretary of Labor sued
Alpha & Omega – d/b/a Travelon – claiming violations of the Fair
Labor Standards Act (FLSA) by misclassifying its medical
transportation drivers as independent contractors instead of
employees.
The trial court granted summary judgment in
favor of the Secretary, finding the drivers were employees, but
the 8th Circuit reversed and remanded because genuine issues of
material fact needed to be resolved.
Travelon hires drivers
to transport patients to and from medical appointments. Travelon
provides equipment such as vans and electronic tablets to drivers
and pays for costs such as internet service and insurance for the
vans. Customers pay Travelon for the transportation services, and
Travelon distributes the entire sum paid by the customers to the
drivers. Drivers are then responsible for paying Travelon weekly
expenses such as a dispatch fee, 35% of the commissions generated
by the drivers' weekly trips (when the drivers' weekly income
exceeds $300), insurance fees, vehicle lease fees, vehicle
maintenance fees, and a tablet rental plus added costs for any
additional gigabytes of data used. Travelon generates its revenue
from these fees paid by the drivers.
Travelon's dispatch
service assigns trips to drivers through an application called
"MediRoutes" on the drivers' tablets. The app monitors the
drivers' GPS locations and their availability. Dispatch also
encourages drivers to notify dispatch when they are available to
take trips. Dispatch then assigns a trip to the driver and
provides instructions through the app such as pick-up/drop-off
times and locations. Drivers set their own schedules and can
change their schedules daily. Travelon, however, only provides
dispatch services 5:00 a.m.–6:00 p.m. Monday–Friday, and 5:00
a.m.–4:00 or 5:00 p.m. on Saturdays.
The court applied the
multi-factor "economic realities" test to determine whether the
drivers were "employees" under the FLSA: (1) "the degree of
control exercised by the alleged employer over the business
operations;" (2) "the relative investments of the alleged employer
and employee;" (3) "the degree to which the alleged employee's
opportunity for profit and loss is determined by the employer;"
(4) "the skill and initiative required in performing the job;" (5)
"the permanency of the relationship;" and (6) "the degree to which
the alleged employee's tasks are integral to the employer's
business."
In applying the six factor "economic realities"
test, the court said that a trier of fact could find the
"control," "profits and losses," and "integral to business"
factors weighed in favor of the drivers being independent
contractors.
As to the "control" factor, there was
competing evidence as to whether the drivers could reject trip
assignments and the extent of control Travelon had over the
drivers' hours.
As to the "profits and losses" factor,
there were questions of fact over whether the drivers were able to
transport multiple customers, use their personal vehicles, and
perform services independent of their work with Travelon, all
which would weigh in favor of an independent contractor
relationship.
As to the "integral to business" factor, a
rational trier of fact could agree with Travelon's
characterization of its business model as merely a technology
company supporting the drivers' medical transportation business,
thus finding the drivers are not integral to Travelon's business.
The court concluded: "In sum, the award of summary judgment
was premature. While the Secretary has shown evidence supporting
an employment relationship between Travelon and its drivers,
Travelon has also shown evidence of an independent contractor
relationship. These competing narratives must be resolved before
the district court makes its legal conclusion as to whether an
employment relationship existed between Travelon and its drivers."
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