Dr7dra.txt
CIVIL RIGHTS COMMISSION
STATE OF HAWAII
In the Matter of ) DR 92-007
)
NORMA SANTIAGO, ) HEARINGS EXAMINER'S
) FINDINGS OF FACT,
Complainant ) CONCLUSIONS OF LAW
) AND RECOMMENDED
- -- - - - - - - - - - - - - -) ORDER
)
IOLANI SWIM CLUB, )
)
Respondent. )
______________________________)
HEARINGS EXAMINER'S FINDINGS OF FACT, CONCLUSIONS
OF LAW AND RECOMMENDED ORDER
I. INTRODUCTION
On November 15, 1990 Norma Santiago filed a complaint
alleging that Respondent Iolani Swim Club (hereinafter "ISC")
unlawfully terminated her employment because of her pregnancy.
On October 29, 1992 the Executive Director issued a final
conciliation demand letter to Respondent ISC. No conciliation
agreement was subsequently secured and on November 17, 1992 the
complaint was docketed for hearing. In its scheduling conference
statement, Respondent ISC contends that Complainant was an
independent contractor who was not protected under H.R.S. Chapter
378.
On December 10, 1992 the Executive Director filed a Petition
for Declaratory Relief with the Commission arguing that H.R.S.
Chapter 378 protects independent contractors, or
alternatively, that the Commission adopt the economic realities
test enunciated in Armbruster v. Quinn, 711 F.2d 1332, 32 EPD
33,702 (6th Cir. 1983) to distinguish covered employees from non-
protected independent contractors. On December 30, 1992 the
Commission assigned the petition to this hearings examiner. On
January 19, 1993 Respondent ISC filed a Statement of No Position
as to the petition.
Oral arguments on the petition were held on January 20,
1993. During the oral arguments, the Executive Director conceded
that independent contractors are not covered under H.R.S. Chapter
378. It also modified its position on the standard for
determining employee status and now urges the Commission to adopt
a test which considers the factors in both the Armbruster economic
realities test and the hybrid common law-economic realities test
found in Spirides v. Reinhardt, 613 F.2d 826, 20 EPD 30,073 (D.C.
Cir. 1979), with emphasis on whether the worker is economically
dependent on the business of the employer. Respondent ISC urges
the Commission to utilize the hybrid test found in Spirides, which
stresses an employer's right to control the means and manner of
the worker's performance.
The parties filed supplemental memoranda on January 29 and
February 3, 1993.
Having reviewed and considered the petition and the
arguments presented, this Hearings Examiner hereby renders the
following findings of fact, conclusions of law and recommended
order.
II. FINDINGS OF FACT
For the limited purposes of this petition, the relevant
findings of fact are as follows:
1. Respondent ISC is a competitive swimming program
located in Honolulu, Hawaii. Its primary function is to provide
swimming instruction to children and adults. Brian Lee was the
director of Respondent ISC from at least November 1989 to August
1990.
2. On or about November 6, 1989, Complainant Norma
Santiago began working as a swim instructor with Respondent ISC.
3. Some time during February 1990, Complainant informed
Mr. Lee that she was pregnant and due to deliver in October, 1990.
4. From about August 25 to September 9, 1990, Respondent
ISC was on a break from its instructional schedule. From about
September 10 to September 14, 1990 Respondent ISC held membership
try-outs.
5. Some time in August 1990 Complainant informed Mr. Lee
that she wanted to return to work the last two weeks of September
1990 and then take a leave of absence to deliver her child.
6. Some time in August 1990 Mr. Lee informed Complainant
that she would be replaced by another swim instructor beginning
on or about September 10, 1990.
7. Complainant's services with Respondent ended on or
about August 31, 1990.
III. CONCLUSIONS OF LAW
The purpose of H.R.S. Chapter 378 is to protect and
safeguard the right and opportunity of all persons to seek, obtain
and hold employment or membership in a labor organization without
discrimination. S.C.Rep. 573, 1963 Senate Journal at 855, 868.
Accordingly, H.R.S. 378-2(1)(A) states that it shall be an
unlawful discriminatory practice
. . . For any employer to refuse to hire or employ
or to bar or discharge from employment, or
otherwise to discriminate against any individual
in compensation or in the terms, conditions, or
privileges of employment . . .
because of race, sex, sexual orientation, age, religion, color,
ancestry, disability, marital status or arrest and court record.
(Emphasis added.) The statute prohibits discrimination in
employment practices. Thus, a complainant must show some
connection to an employment relationship in order to come under
its protection.[1] Since independent contractual affiliations
are not employment relationships, independent contractors are not
covered under Chapter 378.
Employers, however, cannot evade Chapter 378's protections
merely by classifying their employees as independent contractors.
A worker's status must be determined from the facts of each case.
Unfortunately, H.R.S. Chapter 378 does not define the term
"employee" and its legislative history is silent regarding the
test for distinguishing employees from independent contractors.
The term has yet to be interpreted by the Hawaii appellate
courts. The parties therefore urge the Commission to look at
standards developed under Title VII caselaw for guidance.
A. Title VII Tests
Title VII defines "employee" in broad language. 42 U.S.C.
2000e(f) states: "the term 'employee' means an individual
employed by an employer . . . ." 42 U.S.C. 2000e(b) defines an
"employer" as "a person engaged in industry affecting commerce who
has fifteen or more employees . . . ." Because these definitions
are circular and do not detail the factors to be considered in
determining employee status, federal courts have developed four
main tests. These are: 1) the common law test; 2) the
traditional economic realities test; 3) the Armbruster economic
realities test; and 4) the hybrid common law-economic realities
test.
1. The Common Law Test
A few federal courts utilize the common law test formulated
in 220 of the Restatement (Second) of Agency (1958). This test
was originally developed to determine the scope of a master's
vicarious liability for the acts of his servant. See, Restatement
(Second) Of Agency 220 comment c. 220 of the Restatement
states:
(1) A servant is a person employed to perform services
in the affairs of another and who with
respect to the physical conduct in the performance of
the services is subject to the other's control or right
to control.
(2) In determining whether one acting for an other is
a servant or an independent contractor, the following
matters of fact, among others, are considered:
(a) the extent of control which, by the
agreement, the master may exercise over the
details of the work;
(b) whether or not the one employed is engaged
in a distinct occupation or business;
(c) the kind of occupation, with reference to
whether, in the locality, the work is
usually done under the direction of the
employer or by a specialist without
supervision;
(d) the skill required in the particular
occupation;
(e) whether the employer or the workman supplies
the instrumentalities, tools, and the place
of work for the person doing the work;
(f) the length of time for which the person is
employed;
(g) the method of payment, whether by the time
or by the job;
(h) whether or not the work is part of the
regular business of the employer;
(i) whether or not the parties believe they are
creating the relation of master and servant:
and
(j) whether the principal is or is not in
business.
Under this test, the employer's control or right to control the
physical conduct of the person giving service is the most
important and usually determinative factor. Restatement (Second)
Of Agency 220 comment d.
According to these courts, Congress' failure to specifically
define "employee" in the language and legislative history of Title
VII indicates that it intended to construe the term in accordance
with common law agency principles. Smith v. Dutra Trucking Co.,
410 F. Supp 513, 516, 13 EPD 11,460 at 6587 (N.D. Cal. 1976)
affirmed 580 F.2d 1054 (9th Cir. 1978); Cobb v. Sun Papers Inc.,
673 F.2d 337, 340-341, 20 EPD 32,610 at 24,739 (11th Cir.
1982).[2] In addition, these courts point to the use of the
common law test to determine employee status under the National
Labor Relations Act (NLRA)[3], which served as a model for Title
VII. Smith, supra.
2. The Traditional Economic Realities Test
The traditional economic realities test was developed in the
1940s in a series of U.S. Supreme Court decisions which defined
the term "employee" in the context of the NLRA, the Social
Security Act (SSA) and the Fair Labor Standards Act (FLSA). In
NLRB v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed
1170 (1944) a union representing newsboys brought suit against
their employer under the NLRA. 88 L.Ed 1170, 1175. Relying on
common law distinctions, the defendant publisher contended that
the newsboys were not employees but independent contractors who
were outside the protection of the NLRA. Id. at 1179. The
Supreme Court disagreed. It stated that the use of the common law
test would impede achievement of the objectives of the NLRA. Id.
at 1181. Explaining that the term "employee" was not intended by
Congress to be a term of art having a definite meaning, the Court
stated that the word derives its meaning from the context of its
statute, and that such statute "must be interpreted in light of
the mischief to be corrected and the end to be attained". Id.
The Court, however, did not completely reject the common law test,
but stated that it should not be applied exclusively:
It will not do. . . to import wholesale the
traditional common-law conceptions or some distilled
essence of their local variations as exclusively
controlling limitations upon the scope of the statute's
effectiveness . . . .
. . . It cannot be taken, however, that the purpose [of
the NLRA] was to include all other persons who may
perform services for another or was to ignore entirely
legal classifications made for other purposes.
Id. (Emphasis added.)[4]
In United States v. Silk, 331 U.S. 704, 67 S..Ct. 1463, 91
L.Ed 1757 (1947) the Court applied this Hearst analysis to
determine whether coal unloaders and truck drivers who delivered
coal to retailers were employees under the SSA. The Court
reiterated the importance of construing the term "employee" to
accomplish the purposes of the SSA. 91 L.Ed 1957, 1768. It also
considered common law principles, stating:
Probably it is quite impossible to extract from
the statute a rule of thumb to define the limits of the
employer-employee relationship. The Social Security
Agency and the courts will find that degrees of
control, opportunities for profit or loss, investment
in facilities, permanency of relation and skill
required in the claimed independent operation are
important for decision. No one is controlling, nor is
the list complete.
Id. at 1769.[5]
The Supreme Court applied the same economic realities test
to determine employee status under the FLSA. Walling v. Portland
Terminal Co., 330 U.S. 148, 67 S.Ct. 639, 91 L.Ed 809 (1947);
Rutherford Food Corp. v. McComb, 331 U.S. 722, 67 S.Ct. 1473, 91
L.Ed 1772 (1947). In Walling, the Court examined a group of
railroad brakemen trainees' circumstances together with common law
factors to determine their status, stating:
But in determining who are "employees" under the Act,
common law employee categories or employer-employee
classifications under other statutes are not of
controlling significance.
91 L.Ed 809, 812-813 (emphasis added).[6]
At least one federal court has utilized the traditional
economic realities test to determine employee status under Title
VII. See, Mathis v. Standard Brands Chemical Industries, Inc.,
supra. In Mathis, the issue was whether a worker who performed
industrial waste hauling services for a corporation was an
employee. In identifying the test it used, the District Court
of Georgia states:
The distinction between "employment" and
independent contractual affiliations depends on the
economic realities of the relationship . . . . Among
the considerations are whether the plaintiff received
compensation in the form of salary or wages as opposed
to profits derived from a contractual fee, the
opportunities to increase profit by management of
resources, the degree of control by the defendant over
the manner and method in which the work is performed
and the extent to which the plaintiff personally
executed his tasks.
Mathis, supra, at 10,306 (emphasis added). The court also noted
that the five factors mentioned in Silk should also be included
in the determination of employee status under Title VII. Id. n.
3. Again, there was no emphasis on any one factor.[7]
3. The Armbruster Economic Realities Test
The traditional economic realities test was later broadened
by the Fifth Circuit in Mednick v. Albert Enterprises, Inc. 508
F.2d 297 (5th Cir. 1975). In Mednick, the issue was whether a
card room operator was an employee of an apartment-hotel complex
under the FLSA. Id. at 298. In interpreting the Hearst, Silk and
Bartels cases, the court discarded the use of any common law
factors stating:
The terms "independent contractor", "employee",
and "employer" are not to be construed in their common
law senses when used in federal social welfare
legislation. [cit. om.]
Id. The court then developed its own economic realities test
based on: 1) whether the plaintiff was the kind of person intended
to be protected by the FLSA; and 2) whether the person was in
business for himself or dependent upon the business of another for
his living. Id. at 301.
The Mednick economic realities test was essentially adopted
by the Sixth Circuit in Armbruster v. Quinn to define employees
under Title VII.[8] In Armbruster, the issue was whether
manufacturer's representatives were employees for the purpose of
meeting Title VII's fifteen employee jurisdictional requirement.
32 EPD 33,702 at 30,366, 30,370-30,371. The court argued that the
inclusion of a definition of "employee" in Title VII which does
not limit the term to common law concepts shows that Congress
intended a broad definition. Id. at 30,370-30,371. It also found
no "tacit dichotomy between employee and 'independent contractor'
enshrined in Title VII" because 2000e(f) did not explicitly
exclude independent contractors. Id. at 33,702. The court then
held that the representatives must be counted as employees if they
were "susceptible to the kind of unlawful practices that Title VII
was intended to remedy". Id.
The Sixth Circuit suggested five factors relevant under this
test: 1) the process used to hire and terminate; 2) the method
of payment; 3) receipt of company paid benefits or advances; 4)
the opportunity for advancement to positions within the company
or its parent corporation; 5) whether the other products sold by
the representatives were those of the parent corporation. Id. at
30,372 n. 9. Additional factors suggested by other courts and
supporters of this test are: the worker's ability to obtain
comparable employment; the nature of the disciplinary mechanism;
the structure and nature of the employer's business; the degree
of integration of the worker in the employer's business; whether
the worker is hired for a particular skill or is unskilled or
trained by the employer; whether the worker can hire others to
perform the work without the employer's approval; and whether the
worker provides equipment or other resources to perform the work.
See, Ross v. William Beaumont Hospital, 678 F.Supp 655, 675 (E.D.
Mich. 1988); Dowd, The Test Of Employee Status: Economic
Realities And Title VII, 26 William and Mary Law Review 75, 113-
114 (1984).
4. The Hybrid Common Law-Economic Realities Test
The hybrid common law-economic realities test looks at the
economic realities of the relationship in light of common law
principles of agency in order to determine employee status.
Spirides, supra, at 11,357; Cobb, supra, at 24,738-24,739. Courts
utilizing this test argue that because Title VII is remedial in
character, the term "employee" should be liberally construed to
effectuate the purposes of the act. Spirides, supra, at 11,356-
11,357. At the same time, these courts have not adopted the
broader Mednick/Armbruster test because the legislative history
of Title VII does not contain statements comparable to those made
by Senator Hugo Black during the debates on the FLSA that the term
"employee" under the FLSA was given the "broadest definition that
has ever been included in any one act". See, Cobb, supra, at
24,739.
Although the hybrid test requires consideration of several
factors, emphasis remains on the extent of the employer's right
to control the means and manner of the worker's performance.
Spirides, supra; Cobb, supra; Lutcher, 633 F.2d 880, 883. Other
factors to be considered are:
1) whether the work usually is done under the direction of
a supervisor or is done by a specialist without
supervision;
2) the skill required in the particular occupation;
3) whether the employer furnishes the equipment used and
the place of work;
4) the length of time the individual has worked;
5) the method of payment, whether by time or by the job;
6) the manner in which the work relationship is
terminated, i.e., by one or both parties, with or
without notice and explanation;
7) whether annual leave is afforded;
8) whether the work is an integral part of the business of
the employer;
9) whether the worker accumulates retirement benefits;
10) whether the employer pays social security taxes; and
11) the intention of the parties.
Spirides, supra; Lutcher, supra, at 883 n. 4, 5. The test is a
slight expansion of the common law test found in the Restatement.
Four added factors are: consideration of three types of employee
benefits (#7, #9, #10 listed above) and the manner in which
employment may be terminated (#6). One factor omitted from the
Restatement is whether or not the person is engaged in a distinct
occupation or business. The test appears to be based on the post
1947 standard used by courts to determine employee status under
the amended NLRA. Spirides, supra, at 30,073 notes 22, 23, 24,
25; Armbruster, supra, at 33,702 n. 7; see also note 4, supra.[9]
B. Employee Status Under H.R.S. Chapter 378
I conclude that the determination of employee status under
H.R.S. Chapter 378 requires the use of the traditional economic
realities test as enunciated in Hearst, Silk, Walling and Mathis.
That is, the Commission, on a case by case basis, should consider
the factors stated in the common law, hybrid and economic
realities tests without any one factor controlling. This
conclusion is based on: 1) the broad definition of the term
"employment" found in 378-1; 2) an analysis of all four federal
tests; and 3) the Hawaii Supreme Court's adoption of the Hearst
and Silk analysis and test to determine employee status under
other state labor laws.
The fundamental starting point for interpreting a statute is
the language of the statute itself. Schmidt v. AOAO of the Marco
Polo Apts., 73 Haw. 526, 531 (1992); State v. Briones, 71 Haw.
86, 92 (1989). However, a court or agency's primary duty in
interpreting statutes is to ascertain and give effect to the
legislature's intention and to implement that intention to the
fullest degree. Briones, supra. While H.R.S. Chapter 378 does
not define the term "employee", it does contain a definition for
the word "employment". 378-1 states in relevant part:
"Employment" means any service performed by an
individual for another person under any contract of
hire, express or implied, oral or written, whether
lawfully or unlawfully entered into. Employment does
not include services by an individual employed as a
domestic in the home of any person.
Under this definition, an employee is therefore an individual who
performs any service for another person under any contract of
hire.
The adoption of such a broad definition evidences the
legislature's intent to give the term a meaning more expansive
than the common law definition. Bailey's Bakery v. Tax
Commissioner, 38 Haw. 16, 28-29 (1948); 2B Sutherland Statutory
Construction 50.05 (5th Ed. 1991). In addition, Hawaii also
recognizes that a remedial statue is to be construed liberally in
order to accomplish the purpose for which it was enacted. Flores
v. United Air Lines, Inc., 70 Haw. 1, 12 (1988); Roe v. Doe, 59
Haw. 259, 265 (1978).[10] Because H.R.S. Chapter 378 is remedial
in nature, the term "employee" should be liberally construed to
effectuate the purposes of the act. I therefore conclude that
employee status under Chapter 378 is not limited to common law
agency principles.
I also conclude that the hybrid economic realities-common
law test is too narrow. This test follows the post 1947 NLRA
standard, which emphasizes the common law right to control factor.
Such emphasis is not warranted because unlike the post 1947 NLRA,
Title VII and Chapter 378 do not explicitly incorporate the common
law test in their respective definitions of "employee" and
"employment". See, Armbruster, supra, at 33,702, 33,702 n. 7.[11]
In addition, the hybrid test focusses primarily on the formal
structure of the employment relationship. It does not give
adequate consideration to the underlying nature of the
relationship between the worker and employer, i.e., the extent of
the employer's ability to affect the individual's ongoing working
conditions, the standards imposed on ultimate performance, the
structure of commission arrangements and the dependence of the
worker on support functions performed by the employer. See, Dowd,
supra, at 84-85.
On the other hand, I conclude that the Armbruster economic
realities test is too broad. The Armbruster test is based on
Mednick, which incorrectly interpreted Hearst, Silk and Bartels
to conclude that common law principles should not be considered
as part of the economic realities test. See, Davidson, The
Definition Of "Employee" Under Title VII: Distinguishing Between
Employees And Independent Contractors, 53 Cincinnati Law Review
203, 222-223 (1984). Furthermore, as the Executive Director
conceded in oral arguments, the Armbruster test is vague and
overly expansive. It can be read to include anyone who performs
any service for another, since arguably all workers are vulnerable
to discrimination. See also, Davidson, supra, at 224.
In light of the above and with due respect, I conclude that
the correct approach to determining employee status under Title
VII is the traditional economic realities test as stated and
applied in the Mathis case. (See discussion in section III.A.2.,
supra.) This test takes into account the broad definition of
"employee" found in Title VII, construes the term liberally to
accomplish Title VII's remedial purposes and accurately applies
the economic realities test enunciated by the Supreme Court in
Hearst, Silk and Walling. It examines both the formal structure
and the substantive nature of the relationship between the
employer and worker.
The Hawaii Supreme Court's use of this test in the context
of the Hawaii Employment Security Law (HESL) also supports its use
under Chapter 378. 378-1's definition of "employment" is
similar to that found in H.R.S. 383-2[12]. In interpreting
"employment" under HESL, the Hawaii Supreme Court adopted the U.S.
Supreme Court's analysis in Hearst and Silk and determined
employee status not only in the context of the common law test,
but also in light of the mischief to be corrected and the end to
be attained. Bailey's Bakery, supra, at 28. After extensively
quoting the Hearst and Silk cases, the Court states: What the
court held in the Silk case is not as important as the
implications of its conclusions. Implicit in the decision in that
case is the deduction that a beneficiary under the Act need not
sustain common-law master-servant relationship and that the
control test as applied to the vicarious liability of masters
under the respondeat superior doctrine is not the controlling
factor in determining the legal status of the worker. Applying
the rationale of the Hearst and Silk cases to the Hawaii
unemployment compensation law, we conclude that it is not
sufficient to establish immunity from its terms and provisions to
show that there had not been reserved to the master the extent of
control necessary to establish the relationship of master and
servant when measured by the technical standards of the common
law. But it must appear that the worker is free from the
direction or control both under his contract of service and in
fact and is not within the class of workers that the law was
designed to protect.
Id. at 49-50 (emphasis added). Thus, in determining whether
certain bakery delivery drivers were employees, the Court
considered both common law and economic realities factors.[13]
Furthermore, this test has been codified in the
administrative rules defining "employment" in Hawaii's temporary
disability insurance law (H.R.S. Chapter 392) and prepaid health
law (H.R.S. Chapter 393). See, Department of Labor Administrative
Rules 12-11-1 and 12-12-1; Goto, Definition Of An "Independent
Contractor" Under Hawaii's Labor Laws, Legislative Reference
Bureau Report No. 1, 1987 at 25-28. These statutes' definitions
of "employment" are also similar to
Chapter 378's.[14] Given the use of the traditional economic
reality test in interpreting the term "employment" under Chapters
383, 392 and 393, it is likely that the Hawaii appellate courts
would use the same test, as used in Mathis, to interpret
"employment" under Chapter 378.
III. RECOMMENDED ORDER
Based on the above, I recommend that the Commission conclude
that independent contractors are not protected from the
discriminatory practices of employers under H.R.S. Chapter 378
since that statute requires the existence of an employment
relationship.
I also recommend that the Commission adopt the traditional
economic realities test utilized in Mathis v. Standard Brands
Chemicals Industries, Inc., 10 EPD 10,306 (N.D. Ga. 1975) and
Bailey's Bakery v. Tax Commissioner, 38 Haw. 16 (1948) to
determine whether a person is an employee under Chapter 378. This
test involves a case by case consideration of the factors outlined
in the common law, economic realities and hybrid common law-
economic realities tests, as discussed but not limited to the
above. In addition, no factor shall be controlling and the
presence or absence of any one factor may be overcome by the
weight of the other factors. Such test will best reveal the total
circumstances of the work relationship at issue.
Dated: Honolulu, Hawaii February 10, 1993.
______________________________
LIVIA WANG
Hearings Examiner
HAWAII CIVIL RIGHTS COMMISSION
Copies sent to:
Karl K. Sakamoto, Esq. HCRC Enforcement Attorney
Howard K.K. Luke, Esq. Attorney for Respondent ISC
---------------------------------------
footnotes:
1. Actions under Title VII must also have some connection to an
employment relationship. See, Mitchell v. Frank R. Howard
Memorial Hospital, 853 F.2d 762, 47 EPD 38,237 at 53, 381 (9th
Cir. 1988); Lutcher v. Musicians Union Local 47, 633 F.2d 880,
883, 24 EPD 31,402 (9th Cir. 1980); Mathis v. Standard Brands
Chemical Industries, Inc., 10 EPD 10,306 at 5245-5247 (N.D. Ga.
1975); see also Schlei and Grossman, Employment Discrimination Law
at 997 (2nd Ed. 1983).
The employment relationship required under Chapter 378,
however, does not need to be current. It may be in the nature of
potential employment, as in the case of an applicant, or past
employment, such as a discharged worker or pensioner. H.R.S.
378-2(1)(A); Mathis, supra.
Furthermore, the connection with an employment relationship
may be indirect. It may involve situations where employer A
interferes with the relationship between employer B and employer
B's employee. See, Sibley Memorial Hospital v. Wilson, 488 F.2d
1338 (DC Cir. 1973) (hospital liable for interfering with
employment relationship between male nurse (employee) and female
patients (employers) when it refused to refer nurse to patients
because of his sex); Puntolillo v. New Hampshire Racing
Commission, 375 F.Supp 1089 (D. N.H. 1974) (racing commission
liable for interfering with employment relationship between horse
trainer (employee) and horse owners (employers) when it refused
to issue a stall to trainer because of his national origin);
Gomez v. Alexian Brothers Hospital of San Jose, 698 F.2d 1019 (9th
Cir. 1983) (hospital liable for interfering with employment
relationship between doctor (employee) and medical corporation
(employer) when it refused to award corporation contract to
operate an emergency room because of doctor's national origin).
2. The Eleventh Circuit, however, conceded that the economic
realities of the relationship between the employer and worker
should also be considered. 20 EPD 32,610 at 24,739.
3. As amended in 1947. See note 4, infra, and accompanying
text.
4. In response to this broad interpretation of "employee",
Congress amended the NLRA in 1947 to specifically exclude
independent contractors. The definition in relevant part now
states:
. . . the term "employee" shall include any employee
. . . and shall include any individual whose work has
ceased as a consequence of, or in connection with, any
current labor dispute or because of any unfair labor
practice, and who has not obtained any other regular
and substantially equivalent employment, but shall not
include any individual employed as an agricultural
laborer, or in the domestic service of any family of
person at his home, or any individual employed by his
parent or spouse, or any individual having the status
of an independent contractor. . .
29 USC 152(3). Subsequently, courts have applied the common law
test to determine employee status under the NLRA. See, NLRB v.
United Ins. Co. of Am., 390 U.S. 254, 88 S.Ct. 988, 19 L.Ed.2d
1083, 1086 (1968); NLRB v. H & H Pretzel Co., 831 F.2d 650, 653
(6th Cir. 1987).
5. This test was affirmed in Bartels v. Birmingham, 332 U.S.
126, 67 S. Ct. 1547, 91 L.Ed 1947 (1947), another SSA case decided
by the Court. The Court states:
In United States v. Silk, (cit. om.) we held that
the relationship of employer-employee. . . was not to
be determined solely by the idea of control which an
alleged employer may or could exercise over the details
of the services rendered . . . . Obviously control is
characteristically associated with the employer-
employee relationship, but in the application of social
legislation employees are those who as a matter of
economic reality are dependent upon the business to
which they render services. In Silk, we pointed out
that permanency of the relation, the skill required,
the investment in the facilities for work and
opportunities for profit or loss from the activities
were also factors that should enter into judicial
determination . . . It is the total situation that
controls.
91 L.Ed 1947, 1953 (emphasis added). In response to the Silk and
Bartels decisions, Congress amended the SSA to require the use of
the common law test. 42 USC 410(j)(2) now defines "employee" as:
. . . any individual who, under the usual common law
rules applicable in determining the employer-employee
relationship, has the status of an employee . . .
(emphasis added)
6. Unlike the NLRA and SSA, Congress chose not to amend the
definition of "employee" under the FLSA. 29 USC 203(e)(1)
states in relevant part:
Except as provided in paragraphs (2) and (3), the term
"employee" means any individual employed by an
employer.
Courts determining employee status under the FLSA therefore
continue to use the economic realities test enunciated in Hearst,
Silk and Walling. See, Donovan v. Agnew, 712 F.2d 1509, 1513-1514
(1st Cir. 1983). It is also significant to note that the FLSA's
definition of "employee" is identical to Title VII's.
7. At least one state court utilizes this test under its
employment discrimination law. See, McCarthy v. State Farm Ins.
Co., 428 N.W.2d 692, 694 (Mich.App. 1988). The Michigan Court
of Appeals outlines its test as follows:
. . . The economic reality test looks to the totality
of the circumstances surrounding the performed work in
relation to the statutory scheme under consideration.
[cit. om.] While control of the worker's duties is to
be considered under the economic reality test, other
equally important factors include payment of wages,
authority to hire and fire, and the responsibility for
the maintenance of discipline.
428 N.W.2d 692, 694 (emphasis added). The test is also used by
the Michigan courts to determine employee status under its
workers' disability compensation act. Wells v. Firestone Tire &
Rubber Co., 364 N.W.2d 670, 672-673 (1984).
8. The court adopted the standard enunciated in Dunlop v.
Carriage Carpet Co., 548 F.2d 139, 145 (6th Cir. 1977), which
followed the same rationale and standard as Mednick.
9. The EEOC and most circuits, including the Ninth Circuit,
have adopted this test. See, EEOC Compliance Manual 605
Appendix H; Spirides, supra, (D.C. Circuit); EEOC v. Zippo Mfr.
Co., 713 F.2d 32, 32 EPD 33,755 (3rd Cir. 1983); Mares v. Marsh,
777 F.2d 1066, 39 EPD 35,840 (5th Cir. 1985); Lutcher, supra, (9th
Circuit); Oestman v. National Farmers Union Ins. Co., 958 F.2d
303, 305, 58 EPD 41,329 (10th Cir. 1992); Cobb, supra, (11th
Circuit).
10. Remedial statues provide remedies, improve or facilitate
remedies already existing for the enforcement of rights and the
redress of injuries, or involve modern social legislation.
Flores, supra, quoting 3 Sutherland Statutes And Statutory
Construction 60.02 (4th Ed. 1986).
11. The Sixth Circuit also criticized Spirides and Cobb for
rejecting the FLSA standards based on Senator Black's remarks
during Congressional debates on the FLSA. I agree that such
remarks are not a sufficient basis for distinguishing Title VII
coverage from that under the FLSA. See, 2A Sutherland Statutory
Construction 48.13, 48.16 (5th Ed. 1991)
12. 383-2(a) states in relevant part:
As used in this chapter, unless the context
clearly requires otherwise, "employment" subject
to sections 383-3 to 383-9 means service,
including service in interstate commerce,
performed for wages or under any contract of hire,
written or oral, express or implied.
13. In fact, the court found that a bakery's delivery drivers
were employees under the unemployment compensation act because the
bakery had general control over the drivers. Id., at 32.
14. 392-3 states in relevant part:
"Employment" and "employed" means service,
including service in interstate commerce,
performed for wages under any contract of hire,
written or
oral, express or implied, wit an employer, except
as otherwise provided in sections 392-4 and 392-5.
393-3(4) states:
"Employment" means service, including service in
interstate commerce, performed for wages under any
contract of hire, written or oral, expressed or
implied, with an employer, except as otherwise
provided in sections 393-4 and 383-5.
