Stan Freund v. Hi-Tech Satellite, Inc.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 05-14091 May 31, 2006
Non-Argument Calendar THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 04-80117-CV-DTKH
STAN FREUND,
Plaintiff-Appellant,
versus
HI-TECH SATELLITE, INC.,
JOEL EISENBERG,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(May 31, 2006)
Before ANDERSON, BLACK and BARKETT, Circuit Judges.
PER CURIAM:
Stan Freund appeals the district court’s dismissal with prejudice of his Fair
Labor Standards Act (“FLSA”) suit, brought pursuant to 29 U.S.C. § 201 et seq.
The district court determined, after a bench trial, that Freund was not entitled to
overtime pay from Hi-Tech Satellite because he was an independent contractor,
not an employee.
The requirements of the FLSA apply only to employees. The statute 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).
The Supreme Court has explained that courts must determine whether, as a
matter of “economic realit[y],” an individual is an employee or an independent
contractor in business for himself. Rutherford Food Corp. v. McComb, 331 U.S.
722, 728, 67 S.Ct. 1473 (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;
(3) the alleged employee's investment in equipment or materials
required for his task, or his employment of workers;
(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.
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Secretary of Labor v. Lauritzen, 835 F.2d 1529, 1535 (7th Cir. 1987). “No one of
these considerations can become the final determinant, nor can the collective
answers to all of the inquiries produce a resolution which submerges consideration
of the dominant factor – economic dependence.” Usery v. Pilgrim Equip. Co., 527
F.2d 1308, 1311 (5th Cir. 1976).1 The determination of employment status is a
question of law, which we review de novo. Antenor v. D & S Farms, 88 F.3d 925,
929 (11th Cir. 1996). Subsidiary findings are considered issues of fact. Patel v.
Wargo, 803 F.2d 632, 634 n.1 (11th Cir. 1986).
1. Nature and Degree of Control exerted by Hi-Tech over Mr. Freund
The district court determined that Hi-Tech exerted very little control over
Mr. Freund. Hi-Tech scheduled the installation appointments but Freund could re-
schedule them. The specific details about how Freund carried out his duties were
left to him with the exception that 1) he was not allowed to perform any additional
services that were not paid for by the customers without Hi-Tech’s approval; 2) he
had to wear a Hi-Tech shirt during appointments; 3) he had to follow certain
minimum specifications for the installations; and 4) he had to call Hi-Tech to
1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981)(en banc), this
Court adopted as binding precedent all of the decisions of the former Fifth Circuit handed down
prior to the close of business on September 30, 1981.
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confirm he had completed the installation and report any problems that had arisen.
The district court found that Hi-Tech’s interest in Freund’s work was the end
result of customer satisfaction, and not with the day-to-day regulation of his work
habits, hours worked or work methods. The district court credited Joel
Eisenberg’s testimony that Freund was free to perform installations for other
companies and could have established his own subcontracting corporation. The
court noted that several of Hi-Tech’s other installers had created their own
corporate entities.
2. Opportunity for Profit or Loss, Depending on his Managerial Skill
Next the district court reasoned that the looseness of the relationship
between Hi-Tech and Freund permitted him great ability to profit or lose that was
dependant upon his managerial skill. Freund was almost entirely compensated by
the job and not the hour; therefore, by accepting more jobs, performing more
efficiently and hiring employees, he could earn greater sums of money. The court
also credited Eisenberg’s testimony that Freund could have accepted installation
jobs from other companies.
3. Investment in Equipment and Materials Required for the Job, and Employment
of Other Workers
The court concluded from the testimony and the record evidence that Freund
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procured all of the equipment necessary to perform the installations. He drove his
own vehicle and provided his own tools and supplies for each installation.
Finally, although Freund did not hire any workers, other of Hi-Tech’s installers
did.
4. Skill Level
From the record evidence and testimony, the district court discerned that
Freund had special skills to properly install home satellite and entertainment
systems. He was also required to explain the inner workings of the satellite and/or
home entertainment systems to customers and troubleshoot any installation
difficulties.
5. Degree of Permanence in Freund’s Working Relationship with Hi-Tech
The court concluded that Freund’s relationship with Hi-Tech was not one
with a significant degree of permanence. It based its conclusion on the fact that
Freund was able to take jobs from other installation brokers. Also, the court noted
that Freund could take as many or as few jobs as he desired.
6. The Relationship between the Services Freund rendered and Hi-Tech’s
Business
In the only factor weighing for Freund, the district court found that Freund’s
services were an integral part of Hi-Tech’s business.
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On appeal, Freund argues that the district court erred because it looked not
at what the economic reality of the relationship was but rather at what the
relationship could have been. Although Freund claims that Hi-Tech’s allegations
that Freund could have hired employees, taken days off, and worked for other
companies were made after the fact, Hi-Tech was able to point to how its other
installers had behaved in the same relationship. Freund argues that this is
irrelevant but we disagree: it is a fact that tends to support Hi-Tech’s testimony
about how it treated its installers and belies Freund’s allegations that the testimony
was made up after the fact.
This case is substantially similar to an unpublished Fourth Circuit case that
reached the same result. In Chao v. Mid-Atlantic Installation Services, Inc., 16
Fed. Appx. 104 (4th Cir. 2001), the court affirmed the district court’s determination
that cable installers working for the defendant corporation were independent
contractors. The court examined very similar facts and concluded the installers
had sufficient control over their jobs and profits, had special skills, and invested in
their equipment enough to make them independent contractors. Like Freund,
these installers did not set the prices but provided their own equipment and had a
special skill set, both of which the court deemed important. Additionally, it
recognized that although the installers did not set the prices, the installers were
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“no less in control of their net profits as a result of these variables than typical
independent contractors.” Id. at **3.
Having read the trial transcript and reviewed the exhibits, we conclude that
the district court did not err. It belies common sense to read the facts in the way
that Freund argues that they should be. Just because Freund worked six days a
week does not mean that he had to, especially in light of the evidence that other
installers did not. Under Freund’s logic, we would be compelled to determine, in
another type of case, that a firm did not give sick days if the employee never took
them. This does not make common sense. In the absence of evidence
demonstrating that the relationship with Freund was different, evidence of how
Hi-Tech treated its other installers is probative of the working relationship.
AFFIRMED.
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