Economic dependence a key factor in assessing independent-contractor status

It's a tough economy. One solution is to use independent contractors, not employees -- no muss, no bother. When a business no longer needs them, off they go. That's a nice theory, but it's not the way things work in the 5th Circuit. On Oct. 12, the 5th Circuit decided Cromwell, et al. v. Driftwood Electrical Contractors Inc., et al. The allegations in the case were as follows: Cromwell and another guy worked for Driftwood splicing cables post-Hurricane Katrina. They worked for 11 months, 12 hours a day, 13 days on and one day off. They provided their own tools and work trucks with one of them making an investment in these items of $50,000 and the other $16,000. They provided their own insurance and paid their own taxes. But they were so busy for Driftwood that they could not, as a practical matter, work for anyone else. That allegation made all the difference to the 5th Circuit, which reversed an award of summary judgment to the defendants in a Fair Labor Standards Act suit, in which Cromwell and his co-plaintiff claimed they were employees and thus entitled to overtime. Why this decision from the 5th Circuit? While there were facts supporting a finding of independent contractor status, the key issue, according to the court, was that the plaintiffs "were economically dependant upon" the defendants. Lesson: An employer's lawyers should not get suckered into thinking his pile of facts bolstering independent contractor status always will outweigh economic-dependence factor. It won't.