A federal appellate court on Thursday overturned a lower court’s summary judgment and returned a case on whether drivers of a medical service were employed – and therefore covered by the Fair Labor Standards Act – or independent contractors.
The Department of Labor’s pay and hourly distribution determined after an investigation that drivers of Eden, Prairie, Minnesota-based Alpha & Omega USA, which operates as Travelon Transportation, were employed and covered by FLSA, according to the decision of the 8th USA Circuit Court of Appeals in Cincinnati i Martin J. Walsh, Secretary of Labor, U.S. Department of Labor v. Alpha & Omega USA Inc., does business as Tavelon Transportation; Viktor Cernatinsky, and individual.
DOL sued Travelers and Mr. Cernatinsky, its owner, on behalf of 21drivers who worked for the app-based business, which provides transportation for patients to and from doctor visits. The drivers claimed that they were employees and that Travelon had violated the FLSA by not paying them a minimum wage and overtime and not keeping accurate records.
According to Thursday’s ruling, Travelon’s customers pay the company for the transport service and the company distributes the entire sum to the drivers. Drivers are responsible for paying Travelon weekly costs, such as a shipping fee.
The U.S. District Court in Minneapolis granted a summary judgment in favor of the DOL in the case and was overturned by a unanimous three-judge in the Court of Appeal.
The district court “resolved the case by issuing a summary judgment to the secretary, which showed that there were no substantive disputes. We disagree,” the panel said.
In the appellate court’s ruling, the district court stated that, when it was determined that the drivers were Travelon employees, the six factors according to the DOL’s ‘economic reality’ test: the degree of control exercised by the alleged employer; the relative investments of the alleged employer and employee; the extent to which the employee’s opportunity for profit and loss is determined by the employer; the skill and initiative required to perform the job; the duration of the relationship; and the extent to which the employee’s duties are integrated into the employer’s business.
“Travelon has provided evidence from which a rational fact factor could find that ‘control’, ‘profits and losses’ and ‘business integrated’ factors outweigh the benefits of drivers being independent contractors, the judgment said.
For example, with regard to the control issue, “there is competing evidence as to whether drivers can reject travel assignments,” the ruling said. The owner also testified that “drivers could set their own schedule and could change their schedule daily.”
“In summary, the award of a summary judgment was premature,” the ruling said. “While the Secretary has shown evidence to support employment relationships between Travelon and its drivers, Travelon has also shown evidence of an independent contractor relationship.
“These competing stories must be resolved before the district court makes its legal conclusion as to whether an employment relationship existed between Travelon and its drivers,” the verdict said, by reversing the lower court and remanding the case for further proceedings.
DOL had no comments, while the company’s lawyer did not respond to a request for comment.