Texas court wrestles with independent contractor status

And so it goes: Employers come to the crossroad—designate a worker as an employee or as an independent contractor. A lot rides on the path taken. Erroneously pick contractor, and you’re on the hook for unpaid overtime, often on a class action basis. The money owed can add up—fast! Read on.

Wrong choice

Berry’s Reliable Resources hires personal care workers to serve the elderly with tasks such as taking their medication, daily bathing, making meals, and going to medical appointments. It treated a group of these workers as contractors, not employees. (Note: Berry’s also had workers that it treated as employees who performed pretty much the same duties as the ones they treated as contractors.)

The workers sued, claiming they were—under the law and in fact—employees entitled to overtime under the Fair Labor Standards Act (FLSA). The federal trial court agreed and granted the workers summary judgment (dismissal in their favor without a trial).

Case goes to appeals court

On appeal, the U.S. 5th Circuit Court of Appeals (the federal appeals court that covers Texas) agreed with the trial court. Here are key highlights from the appeals court’s decision: