One employer defense (one that is not often able to be raised) to a FLSA collective action is that the employees are independent contractors. In the insurance industry, perhaps more than others, this defense had been interposed, with varying results. Another stone has been added to the defense wall, as a federal judge has dismissed an overtime action, finding that the insurance sales agents were independent contractor. The case is entitled Daskam v. Allstate and was filed in the Western District of Washington.
The independent contractor analysis is a totality test, in theory. Some factors could militate employee status. Indeed, in this case, the court recognized that certain components of the relationship could show employee status, but, in the end, the court viewed the relationships as being sufficiently similar to others found to show contractor status, as to warrant dismissal.
The court noted that “at some point, Allstate may go too far toward controlling the 'when, where, why and how' of selling insurance products and again revert to the position of employer…but based on the record presented, however, the court finds that Allstate has not yet gone too far.”
Under the FLSA, the test for independent contractor status is deemed the “economic realities” test. Under that more flexible construct, the entire fabric of a relationship is examined by a court to gauge if the person is economically dependent on the entity and whether sufficient control is exerted. There had been such a judicial analysis done in 2000, but the court noted that circumstances may have changed and a new analysis was required.
The judge, however, concluded that the same result should obtain. The takeaway here, for any business in any industry, is that if there is an absence of operational control and the individuals can do business with whomever they want, the result should be that the person meets the independent contractor test.
Under any statute or set of regulations.