KMK Law Complex Litigation Blog

Albeit seemingly self-evident, Keller v. Miri, 781 F.3d 799 (6th Cir. 2015), serves as a renewed caveat that title isn’t everything: merely designating workers as independent contractors is not sufficient to avoid Fair Labor Standards Act obligations. In this recent Sixth Circuit decision, the Court reversed the district court, finding sufficient and genuine issues of material fact that entitled a jury to decide whether a satellite dish installer qualified for overtime and minimum wage protections under the FLSA.

Michael Keller, the plaintiff, worked as a skilled satellite repair technician for defendant and satellite-installation-services middleman, Miri Microsystems LLC. Miri provided satellite installation for third-party satellite internet system and service providers. Keller travelled around remote parts of northern Michigan, generally completing two to four installations per day. During the course of his work for Miri, Keller was paid by the job, not by the hour, controlled the number of days he worked, the times at which he worked, and the clothes that he wore to work. Miri did not withhold federal payroll taxes from Keller’s payments, nor did it provide Keller with benefits.

Shortly after Keller stopped working with Miri, he filed a lawsuit alleging FLSA violations and seeking significant overtime compensation from Miri. Miri, arguing that Keller was an independent contractor, filed a motion for summary judgment, which the district court granted. Keller immediately appealed that decision.

On appeal, the Sixth Circuit was quick to point out that “[o]rdinarily, it is the court’s job to determine whether a company has inappropriately classified a worker as an independent contractor.” Where a genuine issue of material fact exists with respect to this classification, however, this decision becomes the province of the jury. It then proceeded to conduct a thorough analysis, using its six-factor “economic realities” test, established under Donovan v. Brandel,¹ to determine whether such issues existed.  The factors considered were:

1. Permanency of the relationship between Keller and Miri;
2. The degree of skill required by Keller to render his services;
3. Keller’s investment in equipment or materials necessary to perform his work;
4. Keller’s opportunity for profit or loss, depending upon his skill level;
5. The degree of control Miri exercised over the manner in which Keller performed his work; and
6. Whether the service rendered by Keller was an integral part of Miri’s business.

Sharply pivoting from the district court, the Sixth Circuit found a plethora of genuine issues amongst these six factors. For example, although Keller did not have an exclusive working relationship with Miri and could have worked for other installation services, Keller chose to work exclusively for Miri for nearly 20 months. Also, the Court cited the amount of time consumed by travel and installation as Miri’s de facto control over Keller’s working hours and ability to work for other companies.

Although the Sixth Circuit acknowledged that Miri did not exert traditional supervisory control over Keller’s job performance, it nevertheless took issue with Miri’s instance that all technicians perform their jobs in accordance with the national service provider’s specifications. The Court’s decision pressed a surprisingly strong hand on the scales with an arguably-broadened definition of “employee.” Circuit Judge Karen Nelson Moore emphasized that the FLSA’s definition of “‘employee’ is strikingly broad and ‘stretches the meaning ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles.’”²

The Sixth Circuit reversed and remanded the case for a jury trial, where Keller and Miri’s arguments will again be put to the test.

The key takeaway from Keller is this: constantly reassess and audit your worker classifications. It is not enough to classify a worker as an independent contractor and hope this holds water with the courts; in fact, it appears courts might make it increasingly difficult to dispose of “misclassification lawsuits” on summary judgment.