Who is an Independent Contractor?
The question of who is an independent contractor versus an employee arises in multiple contexts. Based on the facts presented, courts often find that individuals are in fact independent contractors rather than employees. One recent interesting situation where this issue was litigated involved the tennis umpires who work at the United States Open in Flushing Meadow each year. Meyer at al v. United States Tennis Association, 607 Fed. Appx. 121 (2015).
In that case, a group of tennis umpires sued the United States Tennis Association (“USTA”) alleging they should have been deemed employees under federal and New York law and thus paid overtime for the long hours they worked during the tournament. The district court granted summary judgment for the USTA and the Second Circuit affirmed.
In so doing, the Second Circuit explained that when determining whether individuals are employees or independent contractors under the FLSA an “economic reality” test is used. The test weighs: “(1) the degree of control exercised by the employer over the workers; (2) the workers' opportunity for profit or loss and their investment in the business; (3) the degree of skill and independent initiative required to perform the work; (4) the permanence or duration of the working relationship; and (5) the extent to which the work is an integral part of the employer's business.” No one factor is dispositive. Rather, the test is based on a totality of the circumstances.
The Second Circuit stated that the umpires were “highly skilled workers” who exercised “a high degree of independent initiative and control in officiating tennis matches.” Though an integral part of the U.S. Open, the umpires “invest little in the event” and are “free to decide independently each year whether to apply to officiate again and for how many days in an event that lasts only a few weeks.” Meanwhile, the umpires can serve as umpires for other tennis associations during the rest of the year and hold non-umpiring jobs during the year as well. Based on the totality of the circumstances, the Second Circuit agreed the evidence showed the tennis umpires were properly classified as independent contractors and thus not entitled to overtime payments.