Another look at the independent contractor/employer distinction

The nurses at Harry's Nurses Registry were denied overtime, so they brought a lawsuit. The district court granted them summary judgment, and the nurses won. The Court of Appeals affirms the ruling.

The case is Gayle v. Harry's Nurses Registry, Inc., a summary order issued on December 10. The employer argues that the nurses cannot win because they are not employees. This prompts the Court of Appeals to review once again the rules governing when people are employees or independent contractors. Under the "economic reality test," we consider "(1) the degree of control exercised by the employer over the workers, (2) the workers’ opportunity for profit or loss and their investment in the business, (3) the degree of skill
and independent initiative required to perform the work, (4) the permanence or duration of the working relationship, and (5) the extent to which the work is an integral part of the employer’s business."

These factors favor the nurses. Harry's -- which places nurses with outside entities -- has economic control over them because nurses are not allowed to contract independently with placements, they cannot subcontract a shift to another nurse, they cannot take partial shift and Harry's fixes their hourly rate. Harry's also has professional control over the nurses because the nursing supervisors monitor the nurses' daily phone calls reporting to shifts, and nursing supervisors can require nurses to attend continuing education to maintain their licenses. The nurses have no opportunity to share in profit and loss of the company. They are simply paid an hourly wage and are paid even if the insurance carrier pays Harry's promptly.

Harry's goes so far as to say that nurses are not integral to the business. The Court of Appeals (Katzmann, Winter and Marrero [D.J.]) will have none of this. "Notwithstanding that 'Nurses' is—literally—Harry’s middle name," the Court notes that placing nurses accounts constitutes Harry’s only income, "The nurses are not just an integral part but the sine qua non of Harry’s business. Considering all these circumstances, we agree with the district court that these nurses are, as a matter of economic reality, employees and not independent contractors of Harry’s."

Nor does the Court like another argument made by the employer, that the nurses were not nurses but home health aides who are not entitled to overtime under the exemption for domestic companionship workers. The employer also says "they do not meet the threshold requirement of having performed overtime 'work.'" The Court says, "This argument does violence to the dictionary definition of work as well as to the dignity of nurses, and we reject it emphatically."