Friday, August 3, 2018
Citrus Workers Lose Independent Contractor Case
Between 2007 and 2009, a group of Mexican nationals were hired by Ruiz Harvesting to work as manual laborers picking fruit at Consolidated Citrus’ Florida groves. The workers received clearance to work in the United States through the federal government’s H-2A visa program, which allows employers to hire foreign agricultural workers on a temporary basis. Under the program, employers must submit to the Department of Labor (DOL) an application commonly referred to as a “clearance order” detailing the terms and conditions of their prospective worker’s employment. By federal regulation, the clearance order becomes the employee’s work contract by default if the employer does not draw up a separate contract for them.
Although Consolidated Citrus hired some of its laborers directly, it also engaged Ruiz Harvesting as an independent contractor who recruited the workers, submitted clearance orders to the DOL on their behalves, and ultimately hired them to work in the Consolidated Citrus groves.
As for Consolidated Citrus, it had no role in deciding how much Ruiz Harvesting’s workers would be paid. Rather, Consolidated Citrus simply paid Ruiz Harvesting for its total fruit production, then Ruiz Harvesting determined the payments to its workers. But, because Consolidated Citrus required all workers to be hired through the H-2A program, Ruiz Harvesting had to comply with a number of federal regulations which governed the minimum pay its workers would receive. Ruiz Harvesting chose to pay its workers on a “piece-rate” basis, meaning a fixed rate for every container of fruit they picked; although federal regulations still required each worker to receive a minimum amount each pay period. So, if a worker’s piece-rate earnings fell below the federally-mandated minimum, Ruiz Harvesting still had to pay that minimum amount.
In 2010, the workers brought suit claiming violations of the Fair Labor Standards Act (FLSA) and breach of contract. The workers asserted that Ruiz forced them to pay the company illegal kickbacks that impermissibly reduced the workers’ take-home pay. Specifically, the workers claimed that whenever a worker’s piece-rate earnings fell below the federal minimum, Ruiz Harvesting paid the worker in full but then demanded repayment of the portion it had supplemented. To extract the cash kickback payments, the workers claimed in their lawsuit, Ruiz Harvesting officials often threatened the workers with deportation.
Based on the theory that Consolidated Citrus and Ruiz Harvesting were “joint employers” under the law, the workers also named Consolidated Citrus as a defendant in their lawsuit, contending that the company was equally liable for Ruiz Harvesting’s kickback scheme. Plaintiffs eventually settled with both Ruiz Harvesting and Ruiz and then they proceeded to trial against only Consolidated Citrus. The district court issued findings of fact and conclusions of law following a six-day bench trial finding that Consolidated Citrus was a joint employer for purposes of both the breach-of-contract and FLSA claims.
On Thursday, the 11th Circuit Court of Appeals, while still holding that Consolidated Citrus was a joint employer under the FLSA “economic dependencies test,” reversed the holding that Consolidated Citrus was a joint employer under the breach-of-contact action because it lacked the “right of control” over the workers.
Common Sense Counsel: Next time you are trying to decide how to properly classify someone, as an employee or an independent contractor, understand that the right to control the means and manner of performance is a key factor-with about 20 other factors. Complete the Alabama DOL 5-part checklist at www.alabamaatwork.com to help you decide. Also, get an FLSA confidential audit to see if your pay practices are legal.
Click Here to access the AL DOL 5-part Checklist.
Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and can be contacted at firstname.lastname@example.org or 334-246-2901.