From time to time, employees offer (or are offered an opportunity) to provide further services to their employer in a “freelance” or "contractor" capacity. However, given the control exercised by the employer in the course of the general employment relationship, these arrangements can result in allegations that the “hybrid” employee/contractor is in fact at all times an employee, entitled to employee protections such as minimum wage and overtime under the FLSA. Rejecting just such an allegation, the Court of Appeals for the Tenth Circuit recently affirmed a district court ruling that a security guard employee was not also an “employee” when he provided janitorial services to his employer as an independent contractor. Barlow v. C.R. Eng., Inc., 2012 U.S. App. LEXIS 26379 (10th Cir. Dec. 26, 2012).
In assessing the “economic realities” of the relationship between Plaintiff Barlow and the Defendant with respect to the additional janitorial services he provided, the Court observed that “Barlow and his partner created a licensed, limited liability company in order to provide janitorial services . . . Barlow kept records for the company, opened a separate bank account, and filed a corporate tax return.” Further, Barlow had the “freedom to decide how to accomplish his tasks, even if the company reviewed the ultimate work product.” Given these indicia of an independent business, there was “little in the case [record to] indicate[] the relationship between Barlow and C.R. England materially differed from one the company would have with any other cleaning service except for the fact Barlow also happened to otherwise be an employee.” Thus, hours Barlow spent providing janitorial services did not need to be aggregated with his hours as an employee security guard for the purposes of computing overtime pay under the FLSA.
Barlow provides helpful guidance for employers who wish to engage in separate business arrangements with employees. However, employers should ensure that employees providing such services possess as many of the indicia of independence identified in Barlow as possible under the circumstances and also must be cautious of the view of administrative agencies as to such arrangements.