Whether a business can properly classify an individual as an independent contractor excluded from FLSA coverage is a question governed by the “economic realities” of the relationship between the individual and the business for whom she or he performed services. Under New York State Law, a related but distinct test examines the “degree of control exercised by the purported employer over the results produced or the means used to achieve the results.” In a new opinion, Judge Arthur D. Spatt of the Eastern District New York ruled that freight conglomerate CEVA properly classified its delivery drivers as independent contractors under both tests, and thus the drivers were not entitled to alleged unpaid overtime. Browning v. Ceva Freight, 2012 U.S. Dist. LEXIS 114002 (E.D.N.Y. Aug. 11, 2012).
In Browning, five plaintiffs challenged their contractor status by arguing they were required to accept delivery assignments in order to obtain future work, were required to make themselves available for specific deliveries, were in effect assigned a “schedule” due to the time constraints placed on their deliveries, and were required to forego opportunities for work elsewhere given the nature of their work for CEVA. They argued these controls, imposed by the parties’ independent contractor driver agreements (which all plaintiffs acknowledged they operated under), made them employees of the Company under the FLSA and the Labor Law. Judge Spatt, however, rejected substantially all of Plaintiffs’ contentions, finding that the record conclusively supported the conclusion that the Plaintiffs operated with sufficient freedom in choosing when and how much to provide delivery services to render them independent contractors. In rejecting Plaintiffs’ contentions regarding control, the Judge also observed that “Plaintiffs all sought significant tax benefits associated with their independent contractor status in connection with CEVA,” a fact which the Court gave “serious consideration.”
Browning joins the sister court decision of Judge Joanna Seybert in Velu v. Velocity Express, Inc., 666 F. Supp. 2d 300 (E.D.N.Y. 2009) as authority within the Eastern District holding that, where delivery drivers have the freedom to work as much or as little as they want, and are paid based on the deliveries they make, the “economic realities” of such an arrangement are not contrary to contractor status. Businesses making extensive use of independent contractors must continue to monitor the litigation risks posed by classification of service providers as contractors and keep abreast of changing legislation which may limit the use of independent contractors.