Dive Brief:

• A model whose management company exerted a great deal of control over her bookings and schedule survived summary judgment on the issue of whether she was an employee for purposes of the federal Fair Labor Standards Act (FLSA) and New York state law (Agerbrink v. Model Service LLC, No. 18-1471 (2nd Cir. Sept. 24, 2019)). 
• The model, Eva Agerbrink, was a "fit model" used by designers and clothing companies to test the fit of their designs. Agerbrink signed a three-year contract with MSA Models (MSA), a management company that served as an intermediary between her and the apparel companies she modeled for. Agerbrink said MSA arranged her bookings, negotiated and collected payments and set her appointment schedule. She was also required to give notice in order to end standing appointments.   
• The 2nd U.S. Circuit Court of Appeals said the issues of how much independence Agerbrink had to determine her schedule and income were material disputed facts that were essential to determining whether she was in business for herself. Accordingly, it reversed a district court's summary judgment ruling in favor of MSA.

Dive Insight:

Courts and agencies use various tests when evaluating whether a worker is an employee or an independent contractor, but they all ultimately turn on how much control an employer exerts, or maintains the right to exert, over the work and the working conditions. Generally, the more control, the more likely it is that the worker will be characterized as employee.

The parties' intent when entering into the work arrangement has very little bearing on the analysis. Similarly, a signed agreement to the effect that the worker is an independent contractor rather than an employee is not dispositive. The 9th Circuit recently ruled that a trial court should have looked to the actual amount of control 7-Eleven exerted over its franchisees rather than a written agreement between them. Along similar lines, an Alabama federal court concluded that a delivery driver was actually an employee even though he had signed a form stating that he was an independent contractor.

The U.S. Department of Labor (DOL) tends to crack down hard on employers that misclassify employees as independent contractors because misclassified employees "often are denied access to critical benefits and protections they are entitled to by law," says DOL, including overtime and minimum wage protections, family and medical leave, unemployment insurance, and certain safe workplace laws.

Additionally, because misclassification tends to affect multiple workers at a time, especially for larger employers, it can be an expensive mistake. Flowers Foods, which says it is one of the largest producers of packaged baked goods in the country, recently agreed to pay $9 million to settle allegations that it misclassified its distributors as independent contractors; Flowers Foods maintained a high degree of control over the distributors' relationships with the company and customers.

Employers are well-advised to stay on top of the various, and evolving, laws and tests governing independent contractor status. This is particularly true right now in California, where a new law codifying a worker classification test first adopted by the California Supreme Court was recently signed into law by the governor.