Salinas et al v. Commercial Interiors, Inc. et al

Filing 93

OPINION. Signed by Judge J. Frederick Motz on 11/17/2014. (nd2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

MARIO SALINAS, ET AL.

*
*
*
v.
*
*
COMMERCIAL INTERIORS, INC., ET AL. *
******

Civil No. – JFM-12-1973

OPINION

Plaintiffs, former employees of J.I. General Contractors (“JI”), have brought this action
against Commercial Interiors, Inc. (“Commercial”), under the Federal Fair Labor Standards Act.1
Discovery has been completed, and plaintiffs and Commercial have each filed a motion for
summary judgment. Commercial’s motion will be granted, and plaintiffs’ motion will be denied.
I.
Commercial is a construction company that does interior finishing. Commercial
currently employs 60-70 drywall mechanics directly on its own staff. JI installs drywall, frames,
and ceilings. Juan and Isaias Flores Ramirez are the sole owners of JI, and they manage the
company, together with their two brothers who sometimes work as supervisors.
JI was a subcontractor of Commercial at the sites at which plaintiffs worked. JI has held
at least twelve subcontracts with Commercial and has had one or two contracts with a company

1

Plaintiffs also assert claims under the Maryland Wage and Hour Law, the Maryland Wage
Payment and Collection Act, and for quantum merit. The Maryland Wage and Hour Law has the
same scope, see, e.g., Watkins v. Brown, 173 F. Supp. 2d 409, 416 (D. Md. 2001) as does the
FLSA, and it therefore fails for the same reasons stated in this Opinion. Plaintiffs’ claim under
the Maryland Wage Payment and Collection Act fails because an overtime claim is not properly
brought under that statute. See Butler v. DirectSat USA, LLC., 800 F. Supp. 2d 662, 671 (D. Md.
2011). Plaintiffs’ quantum merit claim fails because it is preempted by the FLSA. See Anderson
v. Sara Lee Corp., 508 F.3d 181, 194 (4th Cir. 2007).
1

called P&P, a company that is now out of business. The subcontracts between JI and
Commercial were entered into by Isaias, who neither read nor wrote them. Isaias does not read
English well.
JI owns no tools and provides none to its workers. Rather, Commercial owned and
provided all tools and equipment that were used by JI workers on its job sites, except for various
small tools that JI’s workers owned and provided for themselves. Commercial also provided all
supplies and materials used by plaintiffs to perform their work, such as the nail studs for framing
and the drywall material and insulation for installing drywall. Commercial also provided “gang
boxes” at each work site so that JI’s workers could store their tools there, if they wished.
Commercial’s foremen checked subcontractors’ work throughout the day and, if the work was
not up to Commercial’s standards, Commercial immediately told the subcontractors’ supervisors
to fix the work. Commercial’s foremen from time to time provided instructions to JI’s workers
through JI’s supervisors, who translated the instructions from English to Spanish, the only
language spoken by many of JI’s workers. Commercial’s project managers had to approve JI’s
work in order for JI to get paid for the work. A superintendent of Commercial gave instructions
to Juan or Isaias about how to adjust staffing levels at the job sites where JI was working. JI did
not prepare invoices for Commercial, and Commercial’s project managers generally released
money to JI based on how much work had been completed.
Juan and other JI supervisors wore sweatshirts bearing Commercial’s logo when working
on Commercial’s jobs. Plaintiffs wore hardhats and vests with Commercial’s logo. They also
had identification cards, holding themselves out as Commercial employees. According to
plaintiffs, they were told that they worked for Commercial and were instructed to tell others that
they worked for Commercial.

2

JI did not keep written records of the amount of time that its employees worked.
Commercial, however, did maintain daily and weekly time records of the work performed by JI’s
workers. According to plaintiffs, they congregated at a 7-Eleven and were transported to the
worksite by JI and were not compensated for their wait and travel time.
II.
Plaintiffs argue that based upon this evidentiary record, Commercial should be held liable
for allegedly unpaid wages due to them by JI as their “statutory employer.” Under the FLSA
undoubtedly, plaintiffs’ case is sympathetic. They apparently are members of a minority group
that may have been victimized by JI and Commercial. Moreover, it may be assumed that JI (like
many subcontractors) is thinly capitalized and is dependent for its business upon Commercial.
Nevertheless, Commercial is entitled to the summary judgment that it seeks.
Courts have long recognized a difference between those who work for an employer and
independent contractors of the employer to whom the employer does not owe duties under the
FLSA. See Schultz v. Cap. Intern. Sec., Inc., 466 F.3d 298 (4th Cir. 2006). This has led courts to
examine the “economic realities” of the relationship between the direct employer of the worker
and an alleged statutory employer to determine the issue of whether a plaintiff is an “employee”
of the latter for purposes of the FLSA. As a general proposition, it cannot be disputed that
general contractors, subcontractors, and sub-subcontractors are independent entities. This
proposition supports that the sub-contract relationship between Commercial and JI does not
make Commercial a “joint employer” of laborers who were employed by JI. See generally
Jacobson v. Comcast, 740 F. Supp. 2d 683 (D. Md. 2010).
Plaintiffs argue, however, that the case turns upon the FLSA’s definition of “employ”
that “includes suffer or permit to work.” 29 U.S.C. §203(g). It would appear that this argument

3

is contrary to years of judicial precedent that distinguish between direct employees and
independent contractors in the “joint employer” analysis. Unquestionably, a person who
contracts with a person who is an “independent contractor” “suffer[s] or permit[s] to work” the
employees of the independent contractor. Therefore, I find unsound plaintiffs’ argument that
Commercial can be deemed to be their statutory employer merely because Commercial suffered
or permitted them to work.
As reflected in my opinion in Jacobson v. Comcast, supra, in my judgment a more
nuanced approach is required. I believe that a multi-factored analysis is required to answer the
“statutory employer” question. Here, the factors to be considered include:
1. Was the relationship between JI and Commercial one that traditionally has been
recognized in the law?
2. Was the amount paid by Commercial to JI pursuant to the contract between them
sufficient to permit the direct employer to meet its legal obligations under the FLSA while
earning a reasonable profit?
3. Did the relationship between JI and Commercial appear to be a “cozy” one, i.e, one
that is virtually exclusive and shaped by things other than objective market forces?
4. Is the alleged violation of the FLSA one of which Commercial, during the ordinary
course of performance of its own duties, should have been aware?
5. Are there other indicia that the relationship between JI and Commercial was designed
to abuse the employees of the direct employer?
In this case the relationship between Commercial and JI, which the record reflects was
one of a subcontractor and a sub-subcontractor, has traditionally been recognized in the law.
Thus, this case is quite different from Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947),

4

a case heavily relied upon by plaintiffs, because in Rutherford the company that was found to be
a statutory employer devised an unconventional and unprincipled scheme to avoid its
responsibilities under the FLSA to persons working on its own assembly line. Likewise, in this
case, although JI neither needed or possessed substantial capital investments, there is no
evidence that Commercial paid it less than was required for JI to meet its FLSA duties while
earning a reasonable profit. Similarly, there is no evidence that Commercial knew of the primary
FLSA violation alleged by plaintiffs – not compensating JI employees for time they spent
coming to work. As a subcontractor, Commercial is not charged with knowledge concerning the
way in which employees of its sub-subcontractors chose to arrive at the worksite. Thus, this case
stands in contrast to a situation in which a contractor – which necessarily oversees the work of a
subcontractor – is aware that the subcontractor is (without paying overtime) making its
employees stay at the work site beyond regular hours.
Plaintiffs have presented evidence that support the third and fifth factors. JI contracted
almost exclusively with Commercial, and the relationship between JI and Commercial appears to
have been quite informal. Moreover, at least some of JI’s employees did not speak English, as
reflected by the fact that JI’s supervisors had to translate what Commercial supervisors were
saying. This evidence, however, gives rise only to a suspicion that Commercial was abusing its
relationship with JI, and suspicion is not sufficient to withstand a summary judgment motion.
As I indicated earlier in this Opinion, plaintiffs’ case is sympathetic. However, their
doctrinal analysis is faulty in that their arguments reach too far, essentially obliterating the wellestablished distinction between independent contractors and employees covered by the FLSA. If
contractors like Commercial are to be held liable for FLSA violations committed with

5

subcontractors with whom they enter into a relationship, it is Congress, not the courts, that must
change the rules of the game.
A separate order effecting the rulings made in this Opinion is being entered herewith.

Date: November 17, 2014

___/s/______________________
J. Frederick Motz
United States District Judge

6