Chao v. Mid-Atlantic Installation Services, Inc. , 16 F. App'x 104 ( 2001 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ELAINE L. CHAO, SECRETARY OF 
LABOR, UNITED STATES
DEPARTMENT OF LABOR,
Plaintiff-Appellant,
v.
MID-ATLANTIC INSTALLATION
SERVICES, INCORPORATED; COMCAST
CABLEVISION OF MARYLAND, L.P.,
d/b/a Comcast Cablevision of
Baltimore County; COMCAST  No. 00-2263
CABLEVISION OF HARFORD COUNTY,
INCORPORATED; COMCAST
CABLEVISION OF HOWARD COUNTY,
INCORPORATED; M/A
TELECOMMUNICATIONS, INCORPORATED;
COMCAST CABLE COMMUNICATIONS,
INCORPORATED; COMCAST CABLE OF
MARYLAND, INCORPORATED,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-97-4238-S)
Argued: June 6, 2001
Decided: July 2, 2001
Before WIDENER, NIEMEYER, and LUTTIG, Circuit Judges.
2 CHAO v. MID-ATLANTIC INSTALLATION SERVICES
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Ellen Randi Edmond, UNITED STATES DEPART-
MENT OF LABOR, Washington, D.C., for Appellant. Douglas
Michael Topolski, MCGUIRE WOODS, L.L.P., Baltimore, Mary-
land; James Joseph Sullivan, Jr., KLETT, ROONEY, LIEBER &
SCHORLING, Philadelphia, Pennsylvania, for Appellees. ON
BRIEF: Henry L. Solano, Solicitor of Labor, Steven J. Mandel,
Associate Solicitor of Labor, Paul L. Frieden, Counsel for Appellate
Litigation, Catherine Oliver Murphy, Regional Solicitor, UNITED
STATES DEPARTMENT OF LABOR, Washington, D.C., for
Appellant. Elena D. Marcuss, MCGUIRE WOODS, L.L.P., Balti-
more, Maryland, for Appellees Mid-Atlantic, et al. Stephen C. Trevi-
san, KLETT, ROONEY, LIEBER & SCHORLING, Philadelphia,
Pennsylvania, for Appellees Comcast, et al.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
The Secretary of the United States Department of Labor ("the Sec-
retary") brought this action alleging that M/A Telecommunications,
Inc. ("MAT") and Comcast Cablevision ("Comcast") violated the Fair
Labor Standards Act ("FLSA") by failing to pay overtime wages to
cable installers. The district court granted summary judgment to MAT
and Comcast, and the Secretary appeals. We affirm on the reasoning
of the district court.
I.
Comcast, a cable television provider, entered into a contract with
MAT for the installation and repair of cable equipment on the prem-
CHAO v. MID-ATLANTIC INSTALLATION SERVICES 3
ises of Comcast’s customers. MAT contracts with individual installers
("the Installers") to perform the installation and repair work. The con-
tract between MAT and the Installers ("the Contract") repeatedly
refers to the Installers as independent contractors. J.A. 290 ("Do not
perform services or sign a contract with [MAT] unless you consider
yourself an Independent Contractor."); J.A. 297 ("It is hereby agreed
and acknowledged . . . that Contractor shall, at all times, function as
an independent contractor and not as [MAT’s] employee.").
Despite the explicit language of the Contract and other indicia that
the Installers are independent contractors, the Secretary brought this
action against Comcast and MAT, alleging that the Installers are
employees within the meaning of the FLSA and that they are there-
fore entitled to overtime pay. The district court granted summary
judgment to Comcast and MAT because it concluded that the Install-
ers are independent contractors not covered by the FLSA.
II.
The requirements of the FLSA apply only to employees. The stat-
ute defines an "employee" as "any individual employed by an
employer." 29 U.S.C. § 203(e)(1). In turn, the FLSA defines "to
employ" as "to suffer or permit to work," 29 U.S.C. § 203(g), and an
"employer" as "any person acting . . . in the interest of an employer
in relation to an employee," 29 U.S.C. § 203(d).
Recognizing that these definitions do little to "solve[ ] problems as
to the limits of the employer-employee relationship under the
[FLSA]," the Supreme Court has explained that courts must deter-
mine whether, as a matter of "economic realit[y]," an individual is an
employee or an independent contractor in business for himself. Ruth-
erford Food Corp. v. McComb, 331 U.S. 722, 728 (1947). Several
factors guide this inquiry:
(1) the nature and degree of the alleged employer’s control
as to the manner in which the work is to be performed;
(2) the alleged employee’s opportunity for profit or loss
depending upon his managerial skill;
4 CHAO v. MID-ATLANTIC INSTALLATION SERVICES
(3) the alleged employee’s investment in equipment or
materials required for his task, or his employment of work-
ers;
(4) whether the service rendered requires a special skill;
(5) the degree of permanency and duration of the working
relationship;
(6) the extent to which the service rendered is an integral
part of the alleged employer’s business.
Secretary of Labor v. Lauritzen, 835 F.2d 1529, 1535 (7th Cir. 1987).
The district court applied the "economic reality" test and held that
the Installers are independent contractors rather than employees of
MAT. J.A. 10-27. The court concluded that the bulk of relevant con-
siderations weigh heavily in favor of independent contractor status,
while only the sixth factor favors the conclusion that the Installers are
employees. See Lauritzen, 835 F.2d at 1534 (explaining that courts
must consider the totality of the circumstances and that no single fac-
tor in the "economic reality" test is dispositive).
A.
First, the district court held that MAT does not exercise the type
of control over "the manner in which the work is to be performed,"
id. at 1535, necessary to "characterize the relationship between the
Installers and MAT as one of employee/employer." J.A. 21. Although
MAT assigns daily routes to the Installers and requires them to report
their progress to a dispatcher periodically, the Installers are free to
complete the jobs within their routes in whatever order they wish, J.A.
332-33; to attend to personal affairs or conduct other business during
the day, J.A. 326, 385-86, 399; to choose and manage their own
employees to help them complete their work orders, J.A. 290; and to
work either independently or together with other Installers, J.A. 527-
30. Thus, the district court concluded that the manner in which the
Installers complete their work is left to their broad discretion and
business judgment, which suggests that they are independent contrac-
tors.
CHAO v. MID-ATLANTIC INSTALLATION SERVICES 5
Moreover, the district court rejected the Secretary’s argument that
MAT’s practice of "backcharging" Installers for failing to comply
with various local regulations or with technical specifications demon-
strates the type of control characteristic of an employment relation-
ship. The court explained that "requiring the Installers to meet MAT’s
and Comcast’s installation specifications is entirely consistent with
the standard role of a contractor who is hired to perform highly tech-
nical duties." J.A. 17. See Dole v. Amerilink Corp., 729 F. Supp. 73,
76 (E.D. Mo. 1990) (explaining that specifications and quality control
"inhere[ ] in any subcontractor relationship"). Further, the court noted
that "[i]t is common in contractual relationships" — but not in sala-
ried employment — "to withhold money if work is not done cor-
rectly." J.A. 18.
B.
As to the second factor, the district court held that the Installers
have an "opportunity for profit or loss" that is indicative of indepen-
dent contractor status. Lauritzen, 835 F.2d at 1535. An Installer’s net
profit or loss depends on his skill in meeting technical specifications,
thereby avoiding backcharges; on the business acumen with which the
Installer makes his required capital investments in tools, equipment,
and a truck; and on the Installer’s decision whether to hire his own
employees or to work alone. Moreover, the district court explained
that "Installers can control their own profits and losses by agreeing to
work more or fewer hours and, more importantly, by improving their
technique so that they can service more customers faster." J.A. 21.
The district court recognized that the Installers are not solely in
control of their profits or losses, since they cannot unilaterally deter-
mine how many Comcast customers they will service on a given day
or the rate at which they are paid for each job. Yet the court con-
cluded that the Installers are no less in control of their net profits as
a result of these variables than typical independent contractors,
"whose income [also] derives from how much work someone else
wants to give them and at what rate they will be paid." J.A. 22.
C.
The district court held that the Installers’ "investment in equip-
ment" and their right to employ workers weigh strongly in favor of
6 CHAO v. MID-ATLANTIC INSTALLATION SERVICES
concluding that they are independent contractors. Lauritzen, 835 F.2d
at 1535. The contract between MAT and the Installers requires the
Installers to supply their own trucks (equipped with 28-foot ladders),
specialized tools, uniforms, and pagers. In addition, the Installers are
responsible for their own liability and automobile insurance, and for
"withholding [their] own and [their] employees’ federal, state and
local taxes as well as any payments due for social security self-
employment taxes, unemployment and workman’s compensation."
J.A. 290. Thus, the Installers incur significant expenses "of a type not
normally borne by employees." J.A. 23. See Amerilink, 729 F. Supp.
at 76 (explaining that such expenditures are typically expected of
independent contractors but not of employees, who are given neces-
sary tools by an employer).
D.
The district court likewise concluded that the degree of skill
required to install and repair cable equipment favors independent con-
tractor status. The court reasoned that the skills of cable installers are
akin to those of carpenters, construction workers, and electricians,
who are usually considered independent contractors. J.A. 23. See
Amerilink, 729 F. Supp. at 77 (stating that cable installers "possess the
special skills of carpenters and electricians").
E.
As to the "degree of permanency and duration of the working rela-
tionship" between MAT and the Installers, Lauritzen, 835 F.2d at
1535, the district court concluded that "[w]hile it is certainly possible
to establish a long-term relationship with MAT, implying employ-
ment, it is not necessarily the norm, nor is it required." J.A. 24. Thus,
the district court held that this factor is neutral.
F.
Finally, the district court concluded that because MAT is in the
business of brokering cable installation to cable providers, the Install-
ers are integral to MAT’s business. However, the court held that this
factor, standing alone, does not create an employment relationship
CHAO v. MID-ATLANTIC INSTALLATION SERVICES 7
between the Installers and MAT. J.A. 26. See Amerilink, 729 F. Supp.
at 77 (explaining that the importance of cable installers to the busi-
ness of a broker "does not alter the overall impression that the Install-
ers are economically independent from [the broker]").
III.
We review the district court’s legal conclusion that the Installers
are independent contractors de novo, Icicle Seafoods, Inc. v. Wor-
thington, 475 U.S. 709, 714 (1986), viewing disputed material facts
in the light most favorable to the Secretary, the non-moving party, on
summary judgment, Kubicko v. Ogden Logistics Servs., 181 F.3d 544,
551 (4th Cir. 1999). After reviewing the parties’ briefs and the appli-
cable law, and having had the benefit of oral argument, we conclude
that the district court correctly granted summary judgment to MAT
and Comcast,* and we affirm on the reasoning of the district court.
See Herman v. Mid-Atlantic Installation Servs., Inc., No. S-97-4238
(D. Md. July 27, 2000).
CONCLUSION
For the reasons stated herein, the judgment of the district court is
affirmed.
AFFIRMED
*We agree with the district court that "[b]ecause MAT cannot be con-
sidered the Installers’ employer, neither can Comcast, whose only rela-
tionship with them is via its contract with MAT." J.A. 18.