Flow testers in the oil and gas industry are sometimes misclassified as independent contractors and denied overtime pay.  When a well goes into production, it must be tested periodically to determine royalties and to update the reserve data. This data becomes extremely important because it determines the economic viability of the reservoir.  As such, flow testers serve a vital role for the oil and gas industry and are often required to work long hours on a regular basis.  

In Howard v. J&A Services, Inc., Civil Action No. 12-cv-2987-WJM-MJW, the plaintiff, individually and on behalf of all others similarly situated, brought a lawsuit alleging that he and the other flow testers were misclassified as independent contractors in violation of the Fair Labor Standards Act (“FLSA”) where the Defendant J&A failed to pay them overtime and minimum wages. Specifically, the plaintiffs claimed that J&A supervised and directed the flow testers; scheduled and disciplined them; required them to attend meetings; instructed them when, where, and how to perform their work; provided safety training to the workers; and mandated that they follow rules when performing services. The Defendants denied these allegations, and affirmatively state that they properly classified plaintiffs and all others similarly situated as independent contractors.

The FLSA provides that “no employer shall employ any of his employees…for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). A fundamental requirement of an FLSA claim is that each plaintiff be an employee of the defendant during the relevant time periods.

To determine if a worker is an employee or an independent contractor, courts in the Fifth Circuit apply an “economic realities” test – “analyzing whether the worker is economically dependent upon the alleged employer or is instead in business for himself.” Pierce v. Apache Corporation, Civil Action No. H-18-1803 (S.D. Tex. 2019). Five criteria have emerged to guide the determination of whether the individual whose status is in doubt is in “economic reality” an independent businessman:

1. the permanency of the working relationship,
2. the opportunity for profit and loss,
3. investment in material,
4. the degree of control, and
5. the individual’s skill. United States v. Silk, 331 U.S. 704, 716 (1947); Pilgrim Equipment, supra, Usery v. Pilgrim Equipment Co., Inc., 527 F.2d 1308, 1311 (5th Cir. 1976).

J&A Services LLC is an Oklahoma oilfield services company. The Plaintiffs were scheduled as regular employees where they had supervisors, were able to be hired and fired, and were told how to do their work. The case was resolved at mediation where the parties settled on behalf of 71 workers for a total of $2 million.

Being misclassified as an independent contractor can have major implications for both an employer and a worker. If you believe that you have been misclassified as an independent contractor and denied overtime pay, you should visit with an experienced overtime attorney to learn about your legal rights.  Josh Borsellino is an overtime attorney licensed in Texas that represents workers who have been illegally denied overtime pay because of their misclassification. Josh fights for the rights of workers that have been denied overtime pay. Josh accepts overtime cases on a contingency basis, meaning that he only gets paid if money is recovered from the company being sued. Josh provides free consultations for anyone with questions about overtime pay. He may be reached at 817.908.9861 or 432.242.7118.