United States Department of Labor v. A+ Nursetemps, Inc. et al
Filing
92
MEMORANDUM AND OPINION INCLUDING FINDINGS OF FACT AND CONCLUSIONS OF LAW. The Parties are directed to meet within twenty (20) days and to confer upon the preparation and submission of an agreed, proposed final judgment and injunction consistent with this opinion. Such submission shall be made within thirty (30) days. Any agreement by either party to the form of the judgment shall not be construed as an agreement with regard to the correctness of the judgment or a waiver of the right to seek r eview of the judgment in whole or in part. If the Parties are unable to agree upon the form and/or amount of the judgment, the Petitioner shall file within thirty (30) days a proposed judgment consistent with this opinion, and the Respondents may have ten (10) days thereafter to file their objections, after which the Court will take the matter under submission. Signed by Senior Judge Wm. Terrell Hodges on 4/5/2013. (LRH)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
OCALA DIVISION
HILDA L. SOLIS, SECRETARY
OF LABOR, UNITED STATES
DEPARTMENT OF LABOR,
Petitioner,
-vs-
Case No.
5:07-cv-182-Oc-10PRL
A+ NURSETEMPS, INC. and
MICHAEL J. ARTHUR,
Respondents.
/
MEMORANDUM OPINION
INCLUDING
FINDINGS OF FACT
AND
CONCLUSIONS OF LAW
This is a Fair Labor Standards Act case, 29 U.S.C. § 201 et seq. (“FLSA”), that
began on May 4, 2007. The Department of Labor, through the Secretary of Labor,
sued A+ Nursetemps, Inc. and its principal, Michael J. Arthur, claiming that they were
employers of temporary health care workers engaged in commerce, and that such
workers were not being paid overtime compensation due to them under the Act (Doc.
1).1
1
The Respondents’ business model is that of a staffing agency or labor contractor
doing business in the health care industry. Pursuant to contracts it has with various health
care organizations (including hospices, hospitals and detention facilities), A+ Nursetemps
supplies health care personnel including both registered and licensed practical nurses to its
clients for shift work in the client’s facility. For these services the client pays A+ Nursetemps
which, in turn, pays the nurses. The nurses are classified by A+ Nursetemps as independent
contractors and are not paid overtime.
The case was initially resolved by the entry of a consent judgment on
November 25, 2008 (Doc. 19).
The judgment was in two parts.
First, the
Respondents were permanently enjoined from violating the provisions of the Act by
employing “any employee in commerce . . . for more than 40 hours in a workweek
unless such employee is compensated for such hours at an overtime rate of at least
one and one-half times the regular rate at which such employee is employed.”2 (Id.,
¶ 1). The Respondents were also enjoined from failing to keep employment records
as prescribed by 29 C.F.R. § 516.2 (Id., ¶ 2).
The second part of the consent judgment (Doc. 19) set out back wages in the
aggregate amount of $ 21,704.02, and liquidated damages of $ 8,295.98, to be paid
to the Department of Labor on behalf of 53 named employees who were identified on
an attachment to the judgment.3
The case became dormant after entry of the judgment, and it remained so for
three and a half years until May 22, 2012. On that date the Department of Labor filed
a motion for an order to show cause (Doc. 20) why the Respondents should not be
held in contempt for violating the injunction.
The Department alleged that the
Respondents were in violation because they were still not paying overtime
2
For better or for worse, the court notes that the injunction was wholly superfluous in
the sense that it did nothing more than recite the Respondents’ FLSA statutory obligation
that was already extant. Specifically, the judgment did not resolve the legal dispute between
the Parties concerning the status of the subject workers as covered employees or noncovered independent contractors.
3
The record does not reflect the filing of any formal satisfaction of the monetary debt
created by the judgment, but the Court assumes that all required sums were paid because
the Department of Labor has not claimed otherwise.
2
compensation to their health care workers. The Respondents replied (Doc. 27) to the
Department’s motion and denied any violation or contempt, contending that the
subject health care workers were independent contractors, not “employees” covered
by the FLSA.
In their subsequent pretrial statement (Doc. 59) the Parties identified, as the
dominant issue to be tried, the question whether the Respondent’s health care
workers are employees or independent contractors for purposes of the FLSA (Id. at
Part XII, pp. 18-19, ¶¶ 2, 6 and 9). The case was then tried to the Court at a four day
bench trial, after which the Court entertained oral argument and directed the filing of
proposed findings and conclusions (see Doc. 83). Those proposals have been
submitted and the case is now ready for decision.
If the employee/independent contractor issue in this case had arisen in any
other context not governed by the FLSA, it could present a closer question.4
Nursetemps argues that it exercises no supervision or control over the nurses’ work
on the client’s premises, and that this fact suggests that the nurses are, therefore,
4
In Garcia v. Copenhaver, Bell & Assoc., M.D.’s, P.A., 104 F.3d 1256, 1266 (11th Cir.
1997) the court of appeals observed that there are three different tests for distinguishing
between an employee and an independent contractor, the first being the common law
agency test established by the Supreme Court in Community for Creative Non-Violence v.
Reid, 490 U.S. 730, 751-752, 109 S. Ct. 2166, 2178-2179 (1989). Under that test, the
dominant factor suggesting an employment is “the hiring party’s right to control the manner
and means by which the work is accomplished.” Garcia, 104 F.3d at 1266 (quoting
Daughtrey v. Honeywell, Inc., 3 F.3d 1488, 1495-96 (11th Cir. 1993). See also Robison By
and Through Bugera v. Faine, 525 So. 2d 903 (Fla. Dist. Ct. App. 1987), and Freedom Labor
Contractors of Florida, Inc. v. State Division of Unemployment Comp., 779 So. 2d 663 (Fla.
Dist. Ct. App. 2001).
3
independent contractors.5 That, however, is a non-sequitur because it assumes that
the nurses work independently, without supervision or direction at the facility of the
client. If the right to supervise and control the manner and means of accomplishing
the work remains in the client at the facility where the work is performed, then the
client would likely become a joint employer together with Nursetemps, and the nurses
would still be employees under the FLSA, not independent contractors. See Antenor
v. D & S Farms, 88 F.3d 925 (11th Cir. 1996).
In any event, the Supreme Court has held that the term “employee” as used in
the FLSA must be given a broader meaning. Rutherford Food Corp. v. McComb, 331
U.S. 722, 67 S. Ct. 1473 (1947). See also, Medrick v. Albert Enterprises, Inc., 508
F.2d 297 (5th Cir. 1975) in which the court of appeals held:
The statutory coverage [of the FSLA] is not limited to those
(whose work activities satisfy the common law ‘control’ test)
but rather to those who, as a matter of economic reality, are
dependent upon the business to which they render service.
508 F.2d at 300 (quoting Fahs v. Tree-Gold Co-op. Growers of Florida, Inc., 166 F.2d
40, 44 (5th Cir. 1948)).6
Thus, the Parties have stipulated in the Pretrial Statement (Doc. 59, Part XII,
p. 19, ¶ 9) as they were compelled to do by the clearly established law in this Circuit,
that the “economic realities test” is the standard to be applied in deciding this case.
And, after applying that more liberal standard, the Court has concluded that the
5
For convenience, the court will use “Nursetemps” to refer to both Respondents.
6
Decisions of the Fifth Circuit before October 1, 1981 are binding precedent in the
Eleventh Circuit. Bonner v. City of Pritchard, 661 F.2d 1206 (11th Cir. 1981).
4
Department of Labor has established by clear and convincing evidence that the
subject workers are employees of the Respondents for purposes of the FLSA, not
independent contractors, and they are subject to the protection of the Act.
Specific findings of fact and conclusions of law will follow.
Findings of Fact
1.
A+ Nursetemps is a licensed, temporary health care staffing agency and
nurse registry under Florida law. See Florida Statutes (2012) Chapter 408, Part II,
§408.801 et seq.; §408.802(15) and §400.506). Its office is located in Inverness,
Citrus County, Florida, within the Middle District of Florida.
2.
At all times material to this case, Nursetemps has been an enterprise
engaged in commerce with an annual gross volume of sales or revenue in the amount
of $ 500,000 or more, and it is subject to the FLSA.
3.
At all times material to this case the Respondent, Michael J. Arthur, was
the President and sole stockholder or owner of Nursetemps. He supervised all of the
business operations of Nursetemps. Health Force is another business name used by
Nursetemps through which it places nurses in health care facilities for longer work
periods than so-called per diem nurses who are assigned daily shifts.
4.
Nursetemps places nurses to work in facilities in multiple states and has
maintained offices in both Alabama and Florida.
5.
Nursetemps has maintained a website on the internet to recruit both
nurses and clients. See http://www.nurse-temps.com.
5
6.
Nursetemps has numerous clients providing health care services such
as hospitals, hospices and detention facilities with which Nursetemps has entered into
substantially similar contractual agreements.
Pursuant to those agreements
Nursetemps furnishes health care personnel including registered nurses, licensed
practical nurses and certified nursing assistants to its clients for shift work in the
client’s facilities.7
7.
Nursetemps has approximately 300 licensed nurses listed in its nurse
registry consisting of “travel” nurses and per diem nurses, including both registered
nurses and licensed practical nurses.
8.
Nursetemps’ per diem nurses are assigned to work at a client’s facility
upon receipt of a request from the facility for coverage of a given shift.
9.
The nurses are not required to work (and are not guaranteed) a specific
number of shifts or hours per week, month or year, and they may decline a shift or
shifts to take time off without penalty. They are also permitted to perform work for
other staffing agencies or other employers while also providing services to
Nursetemps.
10.
Nurses are free to negotiate the hourly rate paid to them by Nursetemps
for work at the facility where they normally accept shift assignments, but such
negotiations rarely occur. Nurses do have the ability to receive different rates of pay
7
For convenience, the Court will use the term “nurses” to include all health care
personnel being provided by Nursetemps to its clients.
6
depending upon the facility at which they choose to accept shifts, the type of shift that
they choose, and the distance they travel to work.
11.
Nursetemps does not provide, nor does it reimburse, health care workers
for any equipment used to perform their work duties, including stethoscopes, blood
pressure cuffs, and scrubs and/or uniforms.
12
Nurses who subscribe to Nursetemps’ registry are responsible for the
costs of renewing their licenses and for staying up to date on their continuing
education credits.
13.
To become a licensed practical nurse (“LPN”) in Florida, an individual
must obtain a license to practice, which involves a full-time, year-long course of study
and clinical rotations, in addition to passing a board exam.
14.
Nurses who subscribe to Nursetemps’ registry are required to
demonstrate their proficiency through skills tests before Nursetemps will offer the
worker a shift to work.
15.
Nurses complete their own time cards which are verified by the facility at
which they have performed shift work and are delivered by the worker to Nursetemps
on a regular basis.
16.
The nurses are paid by Nursetemps for all hours worked and can choose
to be paid daily, weekly or periodically.
17.
Nurses are referred to in Florida’s licensing law as “independent
contractors,” and Nursetemps treats the nurses listed in its registry as independent
contractors, not as employees. It also enters into form agreements with the nurses
7
purporting to classify them in that way. As a consequence, the nurses are not paid
FLSA overtime rates and no tax is withheld from their pay.
18.
The nurses are dependant upon Nursetemps to find and provide work,
and they typically accept the shifts they are offered.
19.
As required by various client facilities and to maintain accreditation by the
Joint Commission,8 Nursetemps provides worker’s compensation insurance coverage
for the nurses it regards as independent contractors.
20.
The nurses accepting work assignments from Nursetemps typically do
not advertise their services or secure business licenses or telephone listings or
website addresses, and do not maintain offices as individual entrepreneurs.
21.
The nurses accepting work assignments from Nursetemps do not employ
others and do not purchase any business insurance coverages.
22.
Some nurses accepting work assignments from Nursetemps formed – at
Nursetemps’ suggestion – limited liability entities or corporations under Florida law,
but the existence of those entities did not alter or change in any way the assignment
of work or the manner in which work was performed, or the means of compensation,
or any other aspect of the relationship between the nurses and Nursetemps.
23.
Nurses accepting work assignments from Nursetemps and working under
identical circumstances in Alabama are classified and treated by Nursetemps as
employees, not independent contractors.
8
The Joint Commission for Accreditation of Health Care Providers is an industry notfor-profit organization that establishes standards and accredits health care providers that
meet those standards. See http://www.jointcommission.org
8
24.
Any discipline (such as not being assigned to a complaining facility) is
administered to a nurse for job related insufficiency or wrong doing by Nursetemps,
not by the facility to which the nurse has been assigned.
25.
Nurses are an integral part of the business of Nursetemps which has no
revenue other than the income derived from its clients for the services provided by the
nurses; and many of the nurses have accepted shift assignments from Nursetemps
on a regular basis for more than a year rather than performing sporadic or isolated
engagements more akin to projects undertaken by independent contractors.
26.
Nursetemps has not maintained employment records with respect to its
nurses in the form and manner required by 29 C.F.R. § 516.2, particularly the
requirement that such records must show the hours worked (and compensation paid)
to each employee during each work week.
Conclusions of Law
1.
This Court has both subject matter and in personam jurisdiction, and
venue is proper in this district and division. See 29 U.S.C. §§ 207 and 216; 28 U.S.C.
§§ 1331 and 1345.
2.
The Respondents constitute an enterprise engaged in commerce as
defined in 29 U.S.C. § 203(s)(1)(A), are covered by the FLSA, and both are
employers as defined in 29 U.S.C. § 203(d).
3.
The FLSA defines “employ” as including “to suffer or permit to work.” 29
U.S.C. § 203(g)
9
4.
The Supreme Court has observed that this definition of an employment
relationship is “the broadest definition that has ever been included in any one Act.”
United States v. Rosenwasser, 323 U.S. 360, 363 n.3, 65 S. Ct. 295, 296 n. 3 (1945)
(quoting 81 Cong. Rec. 7656-57 (1937) (statement of Sen. Hugo Black)). See also
Patel v. Quality Inn South, 846 F.2d 700, 702 (11th Cir. 1988).
5.
Labels, titles or job names that may be applied by the Parties to a given
position or job function through a contract or otherwise, or even legal designations in
other statutes or governmental regulations, do not affect the determination of a
worker’s status under the FLSA. Thus, a worker may be an independent contractor
under other laws or for purposes of contractual relationships, yet still meet the
definition of an employee under the FLSA. See Nationwide Mut. Ins. Co. v. Darden,
503 U.S. 318, 326, 112 S. Ct. 1344, 1349-1350 (1992) (FLSA’s definition of employee
is broader than ERISA); Walling v. Portland Terminal Co., 330 U.S. 148, 150; 67 S.
Ct. 639, 640 (1947) (FLSA encompasses more employees than the common law
definition).
6.
It follows that any characterization of nurses as independent contractors
under state law, by statute or otherwise, has no bearing upon whether an individual
is an employee for purposes of the FLSA. See U. S. Constitution, Art. VI, § 2. See
also Darden, supra, 503 U.S. at 323, n. 3, 112 S. Ct at 1348, n. 3. The Florida
decisions upon which Nursetemps relies, Robinson By and Through Bugera v. Faine,
525 So. 2d 903 (Fla. Dist. Ct. App. 1987) and Freedom Labor Contractors of Florida,
Inc. v. State Division of Unemployment Comp., 779 So. 2d 663 (Fla. Dist. Ct. App.
10
2001) are not binding and are distinguishable because both decisions applied the
common law test which emphasizes the factor of control in determining independent
contractor status.
7.
The Eleventh Circuit cases clearly establish that the “economic realities
test” is the standard to be applied in determining whether a worker is an employee
covered by the FLSA, or is an independent contractor who is not covered by the Act.
Medrick v. Albert Enterprises, Inc., 508 F.2d 297 (5th Cir. 1975); Villarreal v.
Woodham, 113 F.3d 202 (11th Cir. 1997); Freund v. Hi-Tech Satellite, Inc., 185 Fed.
Appx. 782 (11th Cir. 2006).9 See also Antenor, 88 F.3d 925 (applying the economic
realities test in resolving a joint employer issue under the FLSA).
8.
Each of those pertinent Eleventh Circuit decisions recite various factors
to be considered in applying the economic realities test, and the lists are not identical.
All of the cases agree, however, either implicitly or explicitly, that “[n]o one of these
considerations can become the final determinant, nor can the collective answers to
all of the inquiries produce a resolution which submerges consideration of the
dominant factor – economic dependence.” Freund, supra, 185 Fed. Appx. at 783
(quoting Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1311 (5th Cir. 1976)).
9.
The factors listed in the cases include: (a) whether the alleged employer
had the power to hire and fire the workers in question; (b) whether the alleged
employer supervised and controlled the employee work schedules or conditions of
9
Decisions published in the Federal Appendix are not binding precedent, but may be
cited as persuasive authority. See Fed. R. App. P. 32.1; 11th Cir. R. 36-2.
11
employment; (c) whether the alleged employer determined the rate and method of
payment; (d) whether the alleged employer maintained work time records; (e) whether
the worker performed a specialty job requiring specialized training or skill; (f) whether
the contractual terms of the employment varied in a material way as one worker
succeeded another; (g) whether the workers had business organizations that could
offer the worker’s services to others; (h) whether the alleged employer supplied the
premises and/or the equipment necessary to perform the work; (i) whether the worker
employed others to assist in performing the job; (j) the employee’s opportunity for
profit or loss depending upon management skill; (k) the degree of permanency or
duration of the working relationship; and (l) the extent to which the service rendered
by the worker is an integral part of the employer’s business.
(a)
The right to hire and fire. The Court interprets this factor (taken from
Villarreal, supra) to require an examination of whether the employer has retained the
usual common law right to hire and fire at will, or has placed limitations on those rights
by contract as would often be the case in dealing with an independent contractor and
a contractual clause imposing liability or a penalty for cancellation of the work. Here,
of course, Nursetemps has sole control with respect to the selection of nurses to be
assigned to shifts, and may withhold such assignments if it pleases. Just as the
nurses are under no obligation to take assignments, Nursetemps is under no
obligation to make them.
(b)
Control of work schedules and supervision of the work. This factor (also
taken from Villarreal, supra) has two aspects as applied to this case. Control of the
12
work schedules, in terms of assigning work to the nurses, is in the hands of
Nursetemps. Supervision of the work, however, is not. That control is in the hands
of the client facility, not Nursetemps. Thus, as stated earlier, if the common law test
applied, Nursetemps would have a stronger case.
In the context of an FLSA
examination, however, this division of control does not help the nurses’ independent
contractor argument because control of the work does not shift to the nurses, it shifts
to another entity (which may thereby become a joint employer, Antenor v. D & S
Farms, supra,) but it does not mean that the nurses thereby become independent
contractors.
(c)
Determining the rate and method of payment.
In an independent
contractor relationship, the independent contractor normally has at least an equal say
in the rate to be charged for particular work by bidding on the job or by posting or
advertising standard rates for the work to be performed. Here, by contrast, it is
Nursetemps that fixes the hourly rate it will pay the nurses for each shift or each
assignment. Individual nurses have the right to negotiate with respect to the rate they
will earn, but Nursetemps retains the upper hand in deciding the rate it will pay; and
it is Nursetemps that pays the nurses, not the facility where the work is performed.
(d)
Maintenance of time records. While the nurses keep their own time
records, they are paid by the hour, and such records are turned in to and maintained
by Nursetemps (albeit not in full compliance with 29 C.F.R. § 516.2) for the purpose
of calculating the nurses’ pay. Stated another way, the nurses are not paid a flat rate
or piece rate per shift. They are hourly employees.
13
(e)
Performance of a specialty job requiring specialized training or skill.
While it cannot be denied that the work of a nurse requires highly specialized training
and skill, such work in this society is not necessarily a specialty job in the sense that
members of the public do not typically seek them out for private or individual
engagements; rather, the nurses involved in this case work, instead, on an hourly
basis in institutional settings like the hospices, hospitals and detention facilities.
(f)
Variation in terms of employment. There is no evidence of any variation
in the terms of employment as one worker succeeds another. Nurses are assigned
to work shifts for rates established by Nursetemps and (subject to occasional
negotiation of rates with an individual nurse) remain the same from nurse to nurse,
shift to shift, week to week.
(g)
Business organization for offering nurses services to others. While some
of the nurses formed limited liability or corporate entities, the evidence is that those
who did so were acting at the suggestion of Nursetemps, and the existence of such
entities did not change the practical day-to-day relationship between Nursetemps and
the nurses in any way. Also, the formation of such entities did not lead any of the
nurses to use them as a vehicle to offer their services as entrepreneurs to other health
care providers or to the public in general.
(h)
Premises and equipment. Nursetemps does not supply the premises on
which the work is accomplished, but neither do the nurses. The equipment necessary
for the nurses to do their work – stethoscopes, blood pressure cuffs, thermometers
14
and uniforms are provided by the nurses who also bear the cost of their continuing
educational requirements.
(i)
Employment of others. The nurses do not employ others to assist them
in the performance of their work.
(j)
Opportunity for profit. The nurses are paid by the hour for shift work.
There is no opportunity for additional income or profit through the exercise of
managerial skill or increased efficiency in the manner or means of accomplishing the
work.
(k)
Permanency of the relationship. A majority of Nursetemps nurses have
accepted work assignments on a regular basis for a year or more.
(l)
Whether the nurses work is an integral part of Nursetemps business. The
work performed by the nurses is more than an integral part of Nursetemps’ business,
it is the whole of Nursetemps’ business.
10.
Consideration of the foregoing factors, both individually and collectively,
leads inexorably to the conclusion that Nursetemps nurses are employees for
purposes of the FLSA, not independent contractors. The same result is reached when
one simply steps back to take a common sense look at the nature of the relationship
between Nursetemps and the nurses. While it is certainly true that the nurses enjoy
a degree of flexibility in their working lives, not shared by many in the work force,
including an enhanced ability to “moonlight” by working for more than one agency at
a time and by choosing when and where to make themselves available for work, the
simple fact remains that when the nurses are available for work they are dependent
15
upon Nursetemps to provide it, and when they are working on assignment for
Nursetemps they are, during those workweeks, employees of Nursetemps.
11.
The Court concludes in fact and in law that the Respondents have
violated the FLSA by not paying overtime compensation to its nurses for hours worked
over 40 hours per week, and that such violation also constitutes a contempt of the
injunctive order entered in this action on November 25, 2008 (Doc. 19).
12.
At trial, the Department of Labor offered in evidence, and the Court
received, Petitioner’s Exhibits 110 and 143 consisting of worksheets prepared by or
under the direction of a Senior Investigator of the Wage and Hour Division of the
Department of Labor based upon an examination of Nursetemps’ records. Exhibit 110
reflects the names and addresses of 148 nurses employed by Nursetemps during
various work weeks ending May 11, 2008, to September 11, 2011, and also shows,
as to each nurse, the total amount of unpaid overtime compensation due to the nurse
for overtime work during that period. The aggregate total shown to be due is
$148,830.84. At trial, however, the Department of Labor conceded that there may be
some errors in the data shown on Petitioner’s Exhibits 110 and/or 143, and it was
agreed that, in the event the case was decided in favor of the Petitioner as to liability
(as the Court has now determined), the Respondents would be given an opportunity
to suggest corrections to be made to those exhibits before judgment is entered upon
them. The Court also requires input from the parties with respect to the matter of
liquidated damages and the form of the judgment and injunctive relief to be granted
consistent with this opinion.
16
13.
Accordingly, the Parties are directed to meet within twenty (20) days and
to confer upon the preparation and submission of an agreed, proposed final judgment
and injunction consistent with this opinion. Such submission shall be made within
thirty (30) days. Any agreement by either party to the form of the judgment shall not
be construed as an agreement with regard to the correctness of the judgment or a
waiver of the right to seek review of the judgment in whole or in part. If the Parties are
unable to agree upon the form and/or amount of the judgment, the Petitioner shall file
within thirty (30) days a proposed judgment consistent with this opinion, and the
Respondents may have ten (10) days thereafter to file their objections, after which the
Court will take the matter under submission.
IT IS SO ORDERED.
DONE and ORDERED at Ocala, Florida, this 5th day of April, 2013.
Copies to:
Counsel of Record
Maurya McSheehy, Courtroom Deputy
17
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