915 F.3d 1050
6th Cir.2019Background
- Off Duty Police Services, Inc. (ODPS) supplies private security and traffic-control workers (sworn police officers and nonsworn workers) to customers in Louisville; ODPS classifies all workers as independent contractors and requires signed independent-contractor agreements with two-year non-compete clauses.
- Typical assignments are low-skill (e.g., sitting in a patrol-style vehicle, directing traffic); ODPS sets job location, hours, pay rates, and enforces dress/grooming rules; ODPS sometimes inspects sites and disciplines workers for noncompliance.
- Nonsworn workers purchased police-style vehicles and uniforms (estimated $3,000–$5,000); sworn officers generally used existing police equipment from their primary employment.
- Workers submit invoices after assignments (practice began during a DOL investigation); ODPS did not pay overtime and DOL sued alleging misclassification and recordkeeping violations under the FLSA.
- The district court found nonsworn workers were employees entitled to overtime, sworn officers were independent contractors, and that ODPS did not knowingly violate FLSA recordkeeping; both parties appealed.
Issues
| Issue | Plaintiff's Argument (DOL) | Defendant's Argument (ODPS) | Held |
|---|---|---|---|
| Whether ODPS workers are "employees" under the FLSA or independent contractors | Most workers (sworn and nonsworn) are economically dependent on ODPS and thus employees under the FLSA’s economic-reality test | Workers are independent contractors: sworn officers supplement income from police jobs; ODPS is merely an agent matching independent workers to customers | All workers (sworn and nonsworn) are employees under the FLSA; court reversed district court as to sworn officers and affirmed for nonsworn workers |
| Whether ODPS violated FLSA recordkeeping requirements (§211(c)) | ODPS failed to make and keep accurate records; violation does not require employer knowledge | Record inaccuracies were not knowing; thus no violation | Vacated district court’s no-violation finding and remanded: recordkeeping violations need not be knowing to violate §211(c) |
| Appropriate test and factor weight for employee status | Use six-factor economic-reality test; balance factors with FLSA’s broad remedial purpose | Emphasizes officer skill/independence, occasional lack of supervision, and multiple income sources | Court applied six-factor test, found five factors favored employee status (integral, low skill, limited investment, permanence, lack of profit/loss); control factor mixed for sworn officers but overall supports employee status |
| Back wages calculation where records are inadequate | Use reasonable inference (Mt. Clemens) to estimate unpaid overtime; employer bears burden if records inadequate | For some workers (e.g., Medieros), district court should adopt different/calculation methods because of mixed duties/compensation | Affirmed district court’s back-pay calculations as reasonable given ODPS’s poor records; employer failed to offer adequate alternative calculations |
Key Cases Cited
- Keller v. Miri Microsystems LLC, 781 F.3d 799 (6th Cir. 2015) (articulates six-factor economic-reality test for FLSA employee status)
- Donovan v. Brandel, 736 F.2d 1114 (6th Cir. 1984) (economic-reality factors and approach to employee status)
- Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947) (origin of the economic-reality test under the FLSA)
- Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946) (employer recordkeeping burden and inference for damages when records are inadequate)
- Monroe v. FTS USA, LLC, 860 F.3d 389 (6th Cir. 2017) (FLSA remedial purpose and application of Mt. Clemens estimation)
- Karlson v. Action Process Serv. & Private Investigations, LLC, 860 F.3d 1089 (8th Cir. 2017) (contrast on profit/loss and efficiency opportunities for independent contractors)
- Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298 (4th Cir. 2006) (security guards integral to business and profit/loss analysis)