Cable and Internet Installation Wage and Hour Law
We have the requisite knowledge and experience to guide and advise clients with regard to issues pertaining to compensation in the cable, internet and telephone services industries in and around St. Louis Missouri and across the country.
The work arrangements between individuals, service providers and MSOs is often complicated and can take a variety of different forms, from a direct employment relationship to independent contracting through one or more subcontractors. Further, the unique and specific work performed by such individuals implicates a host of potential legal issues. Seeking guidance from knowledgeable counsel to review such issues is critical in this industry.
Independent Contractor Questions
Our Firm has handled several cases and carefully tracked developments within the cable and internet installation industry for many years. We have witnessed many providers shift, or consider shifting, their business from a direct employment relationship with installers to independent contracting for installation services through multiple subcontractors. Such shifts and restructuring of the work arrangement have raised questions and concerns regarding, among other things, the potential for misclassification of installers as independent contractors. Understanding the relevant legal principles and analysis is therefore critical. See Employees vs. Independent Conractors.
To address a question of misclassification, courts focus on the "economic reality" of the relationship between installers and service providers, not whether service providers pay installers as independent contractors through an IRS Form 1099. See Thornton v. Mainline Comm., LLC, 157 F. Supp. 3d 844, 847-48 (E.D. Mo. 2016). This is because the definition of "employ" under the FLSA is particularly "broad and comprehensive." Id. In looking at the economic realities of the relationship, courts consider several factors, such as: (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 kill; (5) the degree of permanency and duration of the working relationship; and (6) the extent to which the service rendered is an integral part of the alleged employer's business. Id. No single factor controls: courts "must look to all the circumstances of the work activity." Id. The ultimate question concerns "whether an individual is in business for himself or is dependent upon finding employment in the business of others." Id.
Given the fact-intensive and multifaceted analysis required by law, there is no definitive or across-the-board answer to this issue of classification. Each business is different and calls for its own fact-driven legal analysis. Having experienced and knowledgeable counsel conduct a detailed review of the work arrangements is the best step to better understand the potential or likelihood of issues or liabilities under the FLSA and other federal and state laws.
One of the biggest mistakes commonly made by businesses is simply believing that titles, contracts, or tax forms will determine whether an individual is an employee under the FLSA. This belief is inconsistent with the "economic realities" determination required by law. Further, the United States Supreme Court has emphasized FLSA rights are non-waivable by contract or otherwise because "this would 'nullify the purposes' of the statute and thwart the legislative policies it was designed to effectuate." Barrentine v. Arkansas-best Freight System, Inc., 450 U.S. 728, 740 (1981).
A similar, common mistake is believing that compliance with industry customs may serve as a defense in an FLSA dispute. However, the United States Supreme Court has made clear that adherence to industry customs will not excuse FLSA violations. Id. ("[t]he [FLSA] was not designed to codify or perpetuate [industry] customs…[and a]ny custom…falling short of [the FLSA's uniform national policy of guaranteeing compensation for all work or employment engaged in by employees covered by the Act], like an agreement to pay less than the minimum wage requirements, cannot be utilized to deprive employees of their statutory rights").
Thus, it is critical for both business and individuals to understand that the propriety of a classification decision will hinge upon careful consideration of the "economic realities" between the parties—not written terms of a contract or industry custom.
Piece Rate Work Issues and Disputes
Even if a business classifies installers as employees, the company must be mindful of traditional wage and hour requirements. Often, service providers pay installers on a piece-rate basis—that is, based upon the number of jobs they complete in any given week. Paying wages on a piece rate basis is permissible but cable installers classified as employees still must be paid overtime pay for hours worked in excess of 40 hours per week. It can become tricky to calculate overtime rates when employees' regular wages are based on the number of completed jobs, as opposed to the number of hours worked. Nonetheless, the FLSA and its regulations provide guidance on how to do so. See, e.g., 29 C.F.R. §§ 778.111, 778.418. This guidance makes one point very clear: whether an employer pays employees on a piece-rate basis or hourly, it is critical for employers to make and maintain accurate record of employees' hours worked each workweek. See 29 U.S.C. § 211(c).
If an employer does not, and thereafter faces a claim of unpaid work by an installer, the employee will likely seek to be permitted to provide his or her own good-faith, reasonable estimate of hours worked per workweek in determining the amount of alleged unpaid overtime and other wages. In the installation services industry, this is a commonly litigated issue, as installers frequently claim they were not paid for a wide variety of alleged work hours, such as mandatory training, time gathering or returning tools and equipment at the beginning and end of the day, and time spent working on or filling out paperwork between jobs. Our attorneys know the relevant legal and factual issues that impact the compensability of these types of tasks and time periods.
Contact us at (314) 645-4100 or by email at Kevin@dolleylaw.com, through our St. Louis, Missouri office, to set up an appointment or phone consultation to review and discuss your particular situation under applicable law and regulations.