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Keller v

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Keller v. Miri Microsystems, LLC, 781 F. 3d 799 (6th Cir. 2015)Moore, C.J.Nationwide Mut. Ins. Co. v. DardenDefendant Miri Microsystems is a satellite-Internet-dish installation company. Michael Keller installed satellite-Internet dishes for Miri's customers six days each week. Keller alleges that MiriI did not compensate him adequately as an employee under the Fair Labor Standards Act of 1938 by failing to pay him overtime compensation. Miri contends, in contrast, that Keller was an independent contractor, rather than an employee, and therefore not entitled to overtime pay.

The FLSA's definition of "employee" is strikingly broad and "stretches the meaning of 'employee' to cover some parties who might not qualify as such under a strict application of traditional agency law principles." , 503 U.S. 318, 326, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992). To effect Congress's broad purpose, we must look to see whether a worker, even when labeled as an "independent contractor," is, as a matter of "economic reality," an employee. Rutherford Food Corp. v. McComb, 331 U.S. 722, 729, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947) ("Where the work done, in its essence, follows the usual path of an employee, putting on an 'independent contractor' label does not take the worker from the protection of the Act."). 

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We also must decide whether Keller has offered sufficient evidence that he worked more than forty hours each week based on his and Miri's deposition testimony. We believe that Keller has presented sufficient evidence to show a genuine issue of material fact. Accordingly, we VACATE the district court's judgment and REMAND the case for consideration by the trier of fact.

I. BACKGROUND

Miri is a limited liability company that operates in Michigan and provides installation services for HughesNet and iDirect, nationwide providers of satellite Internet systems and services. Keller was one of approximately ten satellite-Internet technicians who installed satellite dishes for Miri.

Miri is one of many middlemen in the satellite-installation-services business. Customers purchase satellite Internet services from HughesNet, and then HughesNet forwards those orders on to a distributor, Recreational Sports and Imports ("RS & I"). Next, RS & I sends the installation order to Miri, which provides installation services for the upper part of the Lower Peninsula of Michigan. Customers may choose a time block during which a technician will install the satellite dish, and Miri assigns installation jobs to technicians who work in the territory where the customer resides.

Keller began installing satellite dishes for Miri as a technician while he was working for ABC Dishman, a subcontractor, after he attended a HughesNet satellite-dish-installation certification course given by Miri. After working for ABC Dishman for some time, Keller began installing satellite-Internet dishes for Miri directly.

Miri pays technicians by the job, not by the hour. HughesNet pays Miri $200 for each basic installation, $80 for repairs, $80 for de-installation, and between $130-$145 for upgrades. Miri pays the technician the bulk of these fees, but keeps a percentage.

Keller worked six days a week from 5:00 am to midnight, taking only Sunday off. Keller completed two to four installations per day, and he had to travel between jobs. Miri paid Keller $110 per installation and $60 for each repair he performed. Miri did not withhold federal payroll taxes from Keller's payments or provide Keller benefits.

On November 23, 2012, Keller stopped working for Miri. Soon thereafter, he filed this lawsuit, alleging that Miri's payment system violates the FLSA. Miri filed a motion for summary judgment, arguing that Keller was an independent contractor for Miri, and therefore he was not entitled to overtime compensation under the FLSA. The district court granted Miri's motion for summary judgment, holding that Keller was an independent contractor for Miri, not an employee. Keller appeals. Miri also argues that Keller has not produced evidence to substantiate his claim that he worked more than forty hours per week.

II. DISCUSSION

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B. Employee Status

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The FLSA defines an "employee" as "any individual employed by an employer." According to the FLSA, "'[e]mploy' includes to suffer or permit to work." We have interpreted this framework, in light of the legislative purpose, to set forth a standard that "'employees are those who as a matter of economic reality are dependent upon the business to which they render service.'" To assist our application of the economic-reality test, we have identified six factors to consider:[3]

1) the permanency of the relationship between the parties; 2) the degree of skill required for the rendering of the services; 3) the worker's investment in equipment or materials for the task; 4) the worker's opportunity for profit or loss, depending upon his skill; . . . 5) the degree of the alleged employer's right to control the manner in which the work is performed[; and] . . . [6)] whether the service rendered is an integral part of the alleged employer's business.

We have also considered whether the business had "authority to hire or fire the plaintiff," and whether the defendant-company "maintains the plaintiff's employment records." No one factor is determinative; "[a] central question is the worker's economic dependence upon the business for which he is laboring." Accordingly, we address each factor in turn with an eye toward the ultimate question—Keller's economic dependence on or independence from Miri.

1. The Permanency of the Relationship

Generally, independent contractors have variable or impermanent working relationships with the principal 

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company because they "often have fixed employment periods and transfer from place to place as particular work is offered to them, whereas 'employees' usually work for only one employer and such relationship is continuous and indefinite in duration." Baker v. Flint Eng'g & Constr. Co., 137 F.3d 1436, 1442 (10th Cir. 1998). If a worker has multiple jobs for different companies, then that weighs in favor of finding that the worker is an independent contractor. We may look at the length and regularity of the working relationship between the parties, but even short, exclusive relationships between the worker and the company may be indicative of an employee-employer relationship. The record before us establishes that there is a material dispute as to whether Keller and Miri had a de facto exclusive working relationship.

The district court used three facts to determine the permanence of Keller's and Miri's working relationship. First, Keller did not have a contract with Miri. This fact cannot inform our analysis, however, because we have rejected the argument that "contractual intention [is] a dispositive consideration in our analysis. The reason is simple: The FLSA is designed to defeat rather than implement contractual arrangements." Accordingly, we do not consider this fact in our analysis.

Second, Miri and Keller did not have an exclusive relationship; Keller could work for other satellite-dish-installation companies. We agree with the Second Circuit and conclude that "employees may work for more than one employer without losing their benefits under the FLSA." It is one factor of many to consider in determining whether a worker is economically dependent upon the defendant company.

Third, the control Keller exercised over the number of days per week he worked and how many jobs he took each day informs our analysis of the permanency and exclusivity of the relationship. Schedule variability can serve as an indicator of independent-contractor status; however, "workers have been deemed employees where the lack of permanence is due to operational characteristics intrinsic to the industry rather than to the workers' own business initiative."

There is a genuine dispute of material fact about whether Miri and Keller had an exclusive working relationship. Keller worked for Miri for nearly twenty months. Keller's actions suggest that he treated Miri as his permanent employer: he never turned down an assignment, and he believed Miri could fire him for intransigence. On the other hand, the fact that Miri never explicitly prohibited Keller from performing installation services for other companies, and Keller could choose not to work some days, leaving free time to work for other companies, favor a finding that the relationship was impermanent.

Even so, there is a genuine dispute about whether Keller and Miri had a de facto exclusive relationship. Keller asserts that he did not have time to work for any other company. Technicians, like Keller, work only when a customer needs HughesNet to install or repair his or her satellite dish. When Miri has assignments in counties where multiple technicians work, Miri assigns the installation jobs based on the technician's availability and location. Where the customer lives, when the customer is available, and the amount of time needed to drive to the customer's house—these factors are outside of the technician's control and affect the technician's ability to perform more than three or four installations each day. Moreover, the whole installation process takes approximately two-and-a-half hours to complete, but may take longer if the customer requires that the technician mount the dish onto a pole. Repairs may take less or more time depending on the customer's needs. Even the most efficient technician could not finish four jobs in a day under eight hours, suggesting that technicians have slim control over their working hours and little ability to work for other companies. And the evidence is inconclusive whether technicians are able to engage in other economic ventures. Thus, there is a genuine dispute of material fact as to whether Keller and Miri had an exclusive, permanent relationship in practice.

2. The Degree of Skill Required

The second factor we consider is Keller's skill. "Skills are not the monopoly of independent contractors." More important to our inquiry is whether Keller's profits increased because of the "initiative, judgment[,] or foresight of the typical independent contractor," or whether his work "was more like piecework."

There is ample evidence in the record to support a finding that satellite-dish-installation technicians are skilled workers. Before technicians can begin working for Miri, they must obtain a HughesNet certification. Technicians also need basic computer skills, such as the ability to use Windows, Macintosh iOS, and WARP, Miri's scheduling software. In addition, technicians must be able to use basic hand and power tools, know National Electrical Code provisions, and have the ability to identify whether the satellite was picking up a signal. Thus, Keller was a skilled worker.

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To a certain extent, however, every worker has and uses relevant skills to perform his or her job, but not everyone is an independent contractor. It is also important to ask how the worker acquired his skill. If a worker learned his craft through formal education, an apprenticeship, or years of experience, then it is more likely that the worker's compensation varies with his unique skill and talent. On the other hand, if the worker's training period is short, or the company provides all workers with the skills necessary to perform the job, then that weighs in favor of finding that the worker is indistinguishable from an employee.

Miri provided technicians a significant portion of the training required to obtain the HughesNet certification. First, HughesNet requires the future technician to take an online class. Next, the technician must attend a one-day, in-person class conducted by a HughesNet certified trainer. Miri's employee, Rob Neal, conducted this training on Miri's behalf. Thus, Miri provided Keller with the critical training necessary to do the work.

Of course, a technician's skill may affect his efficiency. But this is not the type of profession where success rises or falls on the worker's special skill. In contrast with carpenters, for example, who have unique skill, craftsmanship, and artistic flourish, technicians' success does not depend on unique skills: a pole mount is a pole mount, a roof mount is a roof mount, and the record suggests that it is easy to learn how to decide which is more appropriate and how to install each type of dish. Moreover, the record does not suggest that Miri, RS & I, or HughesNet selected technicians on the basis of anything other than availability and location, and therefore Miri did not select Keller for assignments because he was particularly skillful. Accordingly, there is a genuine issue of material fact regarding whether the degree of skill required of Keller shows that he was an employee or an independent contractor.

3. Keller's Investment

The next factor we weigh is whether the worker has made a significant capital investment. We have stated that "[t]he capital investment factor is most significant if it reveals that the worker performs a specialized service that requires a tool or application which he has mastered or that the worker is simply using implements of the [company] to accomplish the task." Keller argues that we should consider his investment in comparison with Miri's investment. Other courts have compared the "worker's individual investment to the employer's investment in the overall operation." We agree that courts must compare the worker's investment in the equipment to perform his job with the company's total investment, including office rental space, advertising, software, phone systems, or insurance.

There is one additional wrinkle, however. When considering the worker's capital investment in the equipment needed to perform his job, we must consider those investments in light of the broader question: whether that capital investment is evidence of economic independence. Accordingly, there are inherently some capital investments that do not necessarily evidence economic independence. For example, "investment of a vehicle is no small matter, [but] that investment is somewhat diluted when one considers that the vehicle is also used by most drivers for personal purposes." On the other hand, investment in something like welding equipment signals a greater degree of economic independence because it is not a common item that most people use daily. The same logic also applies to computer equipment and basic hand tools—tools many people have for personal use.

With those guiding principles in mind, we turn to the evidence in this record, considering the evidence in the light most favorable to Keller. The undisputed facts demonstrate that Keller made some capital investment in his work. Keller drove to and from installation jobs in his wife's van for which he held auto insurance.[6] For the most part, technicians paid for gas. Twice, HughesNet provided a gas stipend of five dollars when gas prices were very high, which Miri passed along to technicians. Keller primarily used tools that he owned before he began working for Miri, such as drills and wrenches. He also used a few electronic devices to help collect payment and submit workorders to Miri: an application for his smartphone to charge credit cards, a printer, and a digital camera. He did not rent office space.

Installation requires a dish, cable, transmitter, modem, some hardware, and materials for pole mounts. Keller provided some of these materials, but Miri did, too. Technicians are responsible for providing up to 125 feet of cable, which cost approximately eight cents per foot, to the customer at no cost. Keller purchased coaxial cable from Miri, which Miri deducted from his paycheck. In addition, technicians must provide F-adaptors, ground clamps, zip ties, and dielectric grease or electrical tape to ground and seal the wires. The record does not provide evidence about the cost of those materials, but Miri testified that the cost varies depending on the quality of the products the technician uses, and technicians are free to use cheaper 

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materials provided they meet HughesNet's specifications. Miri provided technicians with the dishes, transmitters, and modems, and reimbursed technicians for the cost of cement. We note, however, that a reasonable factfinder might find that dishes, transmitters, and modems are products that the customers purchased from Miri.

Miri made significant capital investments in its business. The company rents office space, which is open to the public six days a week. Moreover, Miri uses phones and computers to schedule installation appointments.

Thus, the record supports a finding that Keller and Miri invested capital in the equipment, tools, and facilities necessary for the satellite-dish-installation business. To the extent the record establishes that Keller made significant capital investments in the equipment he used on the job, it does so "weakly." Nearly all of the equipment Keller used is common in many households, and Keller used it for both personal and professional tasks. Because this question arises in the context of a motion for summary judgment, we believe the trier of fact should decide how Keller's capital investments compared to Miri's, and whether Keller's capital investments demonstrate that Keller was economically independent.[7]

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[The court continues to review the other factors involved in Keller's working environment.]

5. Miri's Right to Control the Manner Keller Performed His Work

The fifth factor is whether Miri exercised control over Keller's work. The 814*814 district court evaluated the following four considerations when analyzing the control Miri exercised: (1) Keller could refuse work assignments, (2) Miri never supervised or monitored how Keller performed the work, (3) Miri's ability to control Keller's day-to-day work, and (4) Keller could do work for other companies.

Keller had some control over his schedule, but Miri also exercised control. In the event that Keller could not make a scheduled appointment, he could call the customer and reschedule the installation at a mutually agreeable time. Keller usually just followed the schedule he received from Miri, but he was free to reject an assignment or take vacation days. Miri scheduled the installations in blocks, and the technicians were expected to arrive at the customer's house and finish their work within the scheduled time. But a worker's ability to set his own hours and vacation schedule "is not sufficient to negate control." It is also relevant to consider whether "the hours [the worker] [is] required to work on a project . . ., coupled with driving time between home and often remote work sites each day, make it practically impossible for them to offer services to other employers." Therefore, a reasonable jury could find that the way that Miri scheduled Keller's installation appointments made it impossible for Keller to provide installation services for other companies.

Miri did not exercise traditional control over how Keller performed his job. Miri never accompanied Keller during his installation appointments, except when he was in training. Although Miri does not give technicians step-by-step guides about how to perform their jobs, Miri insists that all technicians perform their jobs in accordance with HughesNet's specifications. Miri and HughesNet require that all technicians obtain a HughesNet certification to perform the repair and installation services. And Miri teaches the certification course. In addition, Miri supplies technicians with HughesNet's and RS & I's instructions about how to install the dishes. A jury could therefore find that Miri controlled Keller's job performance through its initial training and hiring practices.

Moreover, Miri monitors the quality of installations remotely. HughesNet and RS & I require Miri to submit reports, documenting when technicians start and finish the installation or repair work. In turn, Miri mandates that technicians must submit those hours through WARP. Miri also requires that technicians take photographs of the installation and send those photos to HughesNet and RS & I along with the other post-installation paperwork. Keller stated that he felt pressure to submit paperwork to Miri as soon as possible.

In addition, Miri guarantees the quality of technicians' performance. HughesNet and Miri warrant that the technician would return to the customer's home to fix any problems within thirty days of the installation. If a customer complains within the warranty time period, then the technician must return and fix the satellite dish without any additional compensation.

Moreover, Miri controlled the amount customers paid Keller—and ultimately Miri—for installations or repairs. Miri told Keller when to collect additional fees from customers and how much to charge.

Regardless of these mechanisms of control, Keller made some decisions free from Miri's control. Miri did not object if Keller or any other technician rearranged their schedules to create the most convenient driving route. Miri stated, however, that had Keller 

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missed appointments or arrived late routinely, then Miri would have severed ties with him. Miri did not require that Keller wear a uniform with Miri's or HughesNet's logo. When it came to how to complete every installation job, Keller was free to assess the customers' needs and respond accordingly without checking with Miri so long as the installation met HughesNet's specifications. Finally, Keller independently decided to bring Kyle and Mrs. Keller on some installation jobs to keep him company and improve his efficiency.

There are genuine facts in dispute about whether and how Miri could discipline Keller. Miri asserted that the company has never disciplined a technician. Customers who were unhappy with an installation or repair would submit feedback to HughesNet, HughesNet would contact Miri, and then Miri would relay the complaints to the technicians. In these conversations, Miri "would discuss . . . the issue and try to find and determine . . . if there was a particular problem on one job or . . . a particular habit that[] [was] being formed" in order to "correct that situation." Keller believed that Miri could or would fire him. The record offers reasons to believe this fear was not unfounded: when Keller told Miri that he wanted to "blow off" a customer's complaint, Miri responded with a threatening email. Given the evidence in the record, a reasonable jury could determine that Miri could, in fact, terminate Keller.

We believe that reasonable minds can differ about whether these forms of remote control support a finding that Miri had the power to discipline and control technicians. Unlike in Brandel, the record may lead reasonable minds to different conclusions as to whether Miri "retain[ed] the right to dictate the manner in which the details of" how Keller installed satellite dishes. 736 F.2d at 1119. Rather, we believe that there is a genuine dispute as to whether Keller's "whims or choices" affected his profitability, or whether "the demands of the business controlled" his ability to install more satellite dishes every day.

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7. Other Factors

The economic-reality test is not an exclusive list of factors. We may and should look to other evidence in the record to determine whether the totality of the circumstances establishes that Miri employed Keller.

A reasonable jury could find that one factor that supports a finding that Keller was an employee is that he held himself out to customers as a representative of HughesNet and not as an independent contractor, as evidenced by the way Keller interacted with customers. Keller never registered for a Federal Employer Identification Number. He did not carry business cards or use signs to identify himself as a Miri employee or as an independent contractor. Keller put a HughesNet sticker on his van and wore a hat that read "Do more with Gen4"—HughesNet's advertising campaign slogan. And Miri offered these shirts, hats, and bumper stickers to technicians for purchase. A uniform can often be a sign of control, but the uniforms were not required, nor did they connect Keller to Miri. We are mindful that Miri never required that Keller do any of this, but we believe these considerations suggest that a jury could reasonably find that Keller was Miri's employee.

8. Conclusion Regarding Employee Status

We conclude that there are many genuine disputes of fact and reasonable inferences from which a jury could find that Keller was an employee. Summary judgment for the defendant is not appropriate when a factfinder could reasonably find that a FLSA plaintiff was an employee. We therefore hold that a jury could reasonably find that Keller was a Miri employee, and Miri is not entitled to summary judgment as a matter of law.

 

1. Which of the three tests does the court apply to determine whether Keller was an employee?
2. Of the factors considered critical by the court in reaching its conclusion, which seem more critical to a determination of employment status? Do you agree with the court in its choice to apply the economic realities test?