E.D.Wisc.: Plaintiff Who Helped Set Up Defendants’ Business Was an Employee Subject to FLSA Coverage, Not a Volunteer

Okoro v. Pyramid 4 Aegis

This case was before the Court on the plaintiff’s motion for summary judgment on a variety of issues. As discussed here, the plaintiff sought a finding that she was entitled to minimum wages under the FLSA as an employee, while the defendants contested that, arguing that any duties she had performed for them were volunteered. The case apparently followed the break-up of the plaintiff from the individual defendant in their romantic relationship. It was undisputed that the plaintiff performed many duties for the defendants- operators of a group home- over the approximate 2 years in question, including obtaining workers compensation insurance, attendance at residential training classes, cleaning and purchasing items for the facility, putting in business processes for the business (i.e. payroll services), marketing, hiring employees on behalf of defendants and other duties necessary for the defendants’ business to operate. While most of these facts were uncontested, the defendants maintained that this work was all volunteered, despite the fact, while the plaintiff asserted she expected to be paid as an employee.

After discussing various tests for employment under the FLSA (i.e. independent contractor vs employee), the court noted that there was no specific test for determining whether someone who performs duties for another is an employee or a volunteer under the FLSA. Thus, the court explained it was constrained only by a flexible “reasonableness” standard that takes into account the totality of the circumstances. The court explained:

In determining whether someone is an employer or a volunteer, this court has not stumbled upon any factored test similar to that of the 6–factor economic realities test used to differentiate independent contractors and employees. Rather, the court finds that the test for employment is governed by a reasonableness standard that takes into account the totality of the circumstances. The court is to review ” ‘the objective facts surrounding the services performed to determine whether the totality of the circumstances’ establish volunteer status, … or whether, instead, the facts and circumstances, objectively viewed, are rationally indicative of employee status.” Purdham, 637 F.3d at 428 (quoting Cleveland v. City of Elmendorf, 388 F.3d 522, 528 (5th Cir.2004)). In addition to the “economic reality” of the situation, other factors to consider include whether there was an expectation or contemplation of compensation, whether the employer received an immediate advantage from any work done by the individual, the relationship of the parties, and the goals of the FLSA. See Alamo Found., 471 U.S. at 300–01;
Rutherford Ford Corp. v. McComb, 331 U.S. 722, 730 (1947) (stating that the employer-employee relationship “does not depend on such isolated factors but rather upon the circumstances of the whole activity”); Lauritzen, 835 F.2d at 1534–35). It is the examination of objective indicia and the application of common sense with which this court arrives at its determination of whether the plaintiff here is an employee for purposes of the FLSA.

Applying this test to the facts at bar, the court held that the plaintiff was an employee rather than a volunteer:

According to Okoro, she never agreed to volunteer for Aegis; at all times, she expected to be compensated for her work. Specifically, Okoro expected to be paid $2,000 per month for her work, and in agreeing to defer her compensation until the facility garnered clients, she still worked with the expectation that she would be paid. (Okoro Aff. ¶¶ 4, 7–9.) Battles, while arguing that Okoro was a volunteer, also states that he intended to pay Okoro for her work if she qualified as an administrator and if the business had enough money in the future. (Battles Aff. ¶¶ 6, 25 .) The court notes Battles’s expectation not for the purpose of weighing the parties’ competing assertions (for this would surely contradict the FLSA’s remedial purpose) but to merely highlight that he too contemplated a compensation mechanism for Okoro’s work.

Expectations aside, it is not entirely correct for the plaintiff to assert that the defendants have failed to identify any personal benefit that Okoro purportedly received from her work for Aegis. In his affidavit, Battles avers that when Okoro sold him worker’s compensation insurance for Aegis, she told him “that she wanted to learn the group home business and therefore, she would learn the business by working at Pyramid 4 Aegis for no compensation.” (Battles Aff. ¶ 5.)

This court is not unmindful of any claim that Okoro may have wanted to learn and indeed did learn about the CBRF business. That may certainly have been part of her motivation in providing Battles some assistance in his effort to build the business. However, Battles does not deny that the work Okoro performed on behalf of Aegis conferred an immediate benefit to the company. Thus, the facts in this case stand in stark contrast to those in Walling. In Walling, the lower court’s finding that “the railroads receive[d] no ‘immediate advantage’ from any work done by the trainees” was unchallenged. 330 U.S. 148, 153. Indeed, “the applicant’s work [did] not expedite the company business, but … sometimes [did] actually impede and retard it.”   Id. at 150. In other words, the railroad was not receiving any immediate benefit from the training that was being given to the prospective brakemen.

Not so in the case at bar. The evidence here does not demonstrate that the work performed by Okoro on behalf of Aegis interfered in any way with the business of Aegis. To the contrary, the nature of the work that she performed, such as cleaning, picking up prescriptions, appearing in court on behalf of clients at the facility, and calling in hours for caregivers to Paychex, was undeniably of substantial assistance to Aegis. Even more to the point, such work was not akin to the “course of practical training,” which the prospective yard brakemen in Walling received. Id. at 150. One hardly needs to be trained in how to clean a facility, how to pick up prescriptions, and how to call in hours for caregivers.

Additionally, the economic reality of the situation was that Okoro worked for Aegis for a substantial length of time. The length of the “training course” that the prospective brakemen received in Walling was seven or eight days. Id. at 149. By contrast, Okoro worked for Aegis over the course of almost one year.

To be sure, Okoro and Battles had a “personal relationship” over the course of the relevant time period. (Okoro Aff. ¶ 6.) While it may be that at least some of the time Okoro spent at Aegis was to socialize with Battles, that particular matter may speak to the amount of damages to which she is entitled; after all, socialization may not be the equivalent of work. For purposes of Okoro’s motion, it is sufficient to find that, despite her relationship with Battles, she still performed substantial work for Aegis, Aegis reaped a direct and immediate benefit from her work, and she had a reasonable expectation that she would be compensated for her work. In sum, taking into account the totality of the circumstances in this case leads me to conclude that Okoro performed work for Aegis as an employee and not as a volunteer.

The court also noted the duty to interpret the FLSA broadly in favor of coverage, given the FLSA’s remedial purpose:

Finally, it must not be forgotten that, by design, the FLSA’s purpose is “remedial and humanitarian.” Tenn. Coal, Iron & R.R. Co. v. Muscodoa Local No. 123, 321 U.S. 590, 597 (1944), superseded by statute, Portal–to–Portal Act of 1947, Pub.L. No. 80–49, 61 Stat. 86 (1947) (codified as amended at 29 U.S.C. § 254). To effectuate this purpose, the FLSA requires courts to interpret its application broadly. See id. With this in mind, allowing Aegis the benefit of Okoro’s free labor when there existed an expectation of compensation would not comport with the FLSA’s purpose.

Thus, to the extent that the plaintiff’s motion seeks a determination that she worked for Aegis and is therefore entitled to compensation for such work under the FLSA, her motion will be granted. Precisely how much work she performed for Aegis, and for how many hours she should be compensated by Aegis, are matters for trial. It is enough to say that the work she performed for Aegis, at least for purposes of the FLSA, was not as a volunteer, but rather as an employee.

Click Okoro v. Pyramid 4 Aegis to read the entire Decision and Order on Plaintiff’s Motion for Summary Judgment.

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