Delivery Truck Driver was an Independent Contractor, not an Employee, Arkansas Federal Court Rules
A driver who owned and leased his delivery trucks and hired other drivers to make deliveries was an independent contractor, and not an employee entitled to overtime, the U.S. District Court for the Eastern District of Arkansas has ruled. Krupicki v. Eagle One, Inc., No. 4:12-cv-00150, 2014 U.S. Dist. LEXIS 46038 (E.D. Ark. Apr. 3, 2014). The court granted summary judgment to the delivery company on the driver’s claims for alleged unpaid overtime under the Fair Labor Standards Act (“FLSA”).
From 2006 to 2011, Stanley Krupicki provided delivery services for Eagle One, Inc. (“EagleOne”) pursuant to an Independent Contractor Agreement. Krupicki purchased a van and leased a box truck. He paid for fuel, maintenance, repairs, and insurance for the vehicles. He also leased from EagleOne a hand-held scanning device that interfaced with EagleOne’s package tracking system and made an electronic record of his completed deliveries. Krupicki hired seven drivers to assist in making deliveries. He set their schedules, established their working conditions, paid all federal and state taxes, established their rate of pay, and purchased all necessary insurance.
EagleOne determined the order in which deliveries were made, and the driver determined the best route. Krupicki was free to accept other delivery opportunities and made deliveries for other companies on Saturdays; however, he was unable to take on any other substantial contracts because of his weekly schedule with EagleOne.
EagleOne compensated Krupicki $1.65 per piece delivered, and Krupicki received a weekly settlement check for deliveries. EagleOne did not withhold state or federal payroll taxes from the checks. In November 2011, Krupicki complained that his settlement check did not include certain deliveries. EagleOne told Krupicki that it would compensate him for the missing deliveries; the next day, EagleOne terminated its contract with Krupicki.
Krupicki sued EagleOne for alleged unpaid overtime under the FLSA. He also alleged EagleOne had misclassified him as an independent contractor. The parties cross-moved for summary judgment; Krupicki asked the court to decide he was misclassified as an independent contractor, and EagleOne asked the court to dismiss Krupicki’s claims.
Whether an individual qualifies as an employee under the FLSA depends on the “economic reality” of the parties’ working relationship. When analyzing the parties’ relationship, courts examine six factors:
- the degree of control exercised by the alleged employer;
- the worker’s investment in the business;
- the degree to which the worker’s opportunity for profit and loss is determined by the alleged employer;
- the skill and initiative in performing the job;
- the permanency of the relationship; and
- the extent to which the work is an integral part of the alleged employer’s business.
No one factor is controlling; rather, courts determine the case on the totality of the circumstances.
Driver’s Claims Dismissed
As to the first factor, Krupicki argued he should have been classified as an employee because EagleOne maintained complete control over his delivery routes and required him to adhere to a strict daily schedule. EagleOne maintained Krupicki was free to operate his delivery routes in any manner within the windows of time established by the customers. Further, it argued Krupicki was free to make deliveries for other companies. The court concluded the facts did not favor either party. That Krupicki could work for other companies and hired his own drivers favored independent contractor status. However, that EagleOne set the drivers’ schedules was indicative of an employer-employee relationship.
As to the second factor, Krupicki argued his investment in his business was minor when compared with EagleOne’s overall operations. The court disagreed, finding Krupicki made a significant investment in his delivery business, including purchasing one truck and leasing another. Krupicki paid for all of his business expenses, including fuel, maintenance, repairs, and insurance. Thus, the court found the facts supported that Krupicki was an independent contractor.
As to the third factor, Krupicki argued he had no real opportunity for profit and loss because EagleOne determined the number of packages assigned to him each week and thus, his compensation. EagleOne contended Krupicki chose his routes and could increase his deliveries by hiring other drivers. The court noted Krupicki hired as many as seven drivers and purchased a van to take on an additional delivery route. Also, Krupicki was free to use his van for other companies and set his drivers’ compensation. The court also pointed out that Krupicki’s compensation varied from year to year, which was indicative of an opportunity for profit and loss. Therefore, the court concluded the facts supported that Krupicki was an independent contractor.
With respect to the fourth factor, on skill and initiative, the court found Krupicki resembled an employee because, as a delivery truck driver, his work was more like “piecework” than an enterprise that actually depended for success upon the initiative, judgment or foresight of the typical independent contractor. Likewise, on the sixth factor, the court found Krupicki’s work was integral to EagleOne’s business. However, the court concluded the permanency of the relationship, the fifth factor, did not weigh in either party’s favor. That the parties’ agreement was not for a fixed term and lasted several years supported Krupicki’s argument that he was an employee. By contrast, that the agreement was terminable at will and Krupicki could work for other companies supported EagleOne’s argument that he was an independent contractor.
Based on the totality of the circumstances, the court concluded Krupicki failed to demonstrate he was an employee, rather than an independent contractor.
The question of drivers’ status as independent contractors has been the subject of litigation throughout the U.S. This case illustrates how fact-sensitive the issue of independent contractor status is.