Judge Kallon Confirms That Merely Labeling Employees As “Subcontractors” Does Not Avoid FLSA Liability.

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Yesterday, I wrote about Judge Abdul Kallon’s decision in Ingram v. Passmore, No. 2:14-cv-00004-AKK (Mar. 29, 2016):  Judge Kallon Finds That Ignorance Of The Law Is No Excuse For Failing To Pay Overtime

Ingram is the gift that keeps on giving, because it also demonstrates the danger of attempting to avoid overtime requirements by labeling employees as “subcontractors.”  I previously wrote about that danger here:  How “Independent” Are Your Independent Contractors?

In Ingram, Passmore Towing & Recovery called its tow truck drivers “subcontractors” and hoped that it would not be required to pay those drivers overtime.  But, Judge Kallon found that Passmore offered no evidence to refute the drivers’ assertion that they were actually employees.  As required by the FLSA, Judge Kallon analyzed six factors to determine that the drivers were employees — the first factor being “control.”  He found:  “Passmore hired the drivers, set their commission, disciplined the drivers, paid their wages, and hired managers to supervise their work.  Additionally, Passmore had the opportunity to unilaterally change the conditions of employment,which it did on multiple occasions.”

Ingram provides a cautionary tale for employers.  Ignoring the law and attempting to use the label of “subcontractor” are a recipe for disaster.