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Safety consultants are often misclassified as independent contractors and wrongfully denied overtime pay

Safety consultants working for oilfield companies are often designated as independent contractors and wrongfully denied overtime pay. A federal judge in Houston recently certified a class of drilling and completions Safety Consultants working for Apache Corporation that had been classified as independent contractors. In Pierce v. Apache Corporation, Civil Action No. H-18-1803 (S.D. Tex. 2019), the Court ultimately decided to certify a class of drilling and completions Safety Consultants in the Delaware Basin, Permian Basin, and Midland Divisions.

The Fair Labor Standards Act (“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). An employee bringing an action for unpaid overtime compensation must first demonstrate by a preponderance of the evidence:

  1. that there existed an employer-employee relationship during the unpaid overtime periods claimed;
  2. that the employee engaged in activities within the coverage of the FLSA;
  3. that the employer violated the FLSA’s overtime wage requirements; and
  4. the amount of overtime compensation due. Johnson v. Heckmann Water Resources (CVR), Inc., 758 F.3d 627, 630 (5th Cir. 2014).

As a result, 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 “as a matter of economic reality, the worker is economically dependent upon the alleged employer or is instead in business for himself.” Apache, No. H-18-1803. 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).

Apache is a global oil and gas exploration and production company. According to the Pierce lawsuit, the Plaintiff worked for Apache as a Safety Consultant where he was paid a day rate and improperly classified as an independent contractor. Plaintiff filed a lawsuit against Apache alleging that it misclassified him and other Safety Consultants as independent contractors and failed to pay them wages and overtime compensation as is required under the FLSA. The Plaintiff requested conditional certification of this case as a collective action, presenting evidence that the economic realities factors are the same or substantially similar for all drilling and completions Safety Consultants in Apache’s Texas Divisions. Apache, No. H-18-1803.

The question of whether to certify a lawsuit under FLSA as a collective action involves two steps: First, the Court decides whether to issue notice to potential class members. Here, the plaintiff is required to show that

  1. there is a reasonable basis for crediting the assertions that aggrieved individuals exist,
  2. that those aggrieved individuals are similarly situation to the plaintiff in relevant respects given the claims and defenses asserted, and
  3. that those individuals want to opt-in to the lawsuit. Walker v. Walker, 870 F. Supp. 2d at 465. Second, when discovery is largely complete and the defendant moves to decertify the conditionally certified class, this step is met. Walker v. Honghua Am., LLC, 870 F. Supp. 2d 462, 465 (S.D. Tex. 2012).

Apache argued against conditional certification, claiming that the issues related to whether the consultants were misclassified as independent contractors was too individualized. However, the Court rejected this argument, finding as follows:

[Plaintiff] presents evidence also that he and the other Safety Consultants had little or no financial investment in working for Apache beyond work clothes, transportation to and from work, and personal electronics equipment such as laptops and cell phones. [Plaintiff] states under oath that Safety Consultants were not financially responsible for damaged equipment and had no risk of business loss. [Plaintiff] presents evidence that Safety Consultants were not allowed to work for any company other than Apache, they had no ability to negotiate the amount or method of compensation for their work, and there was no ability to earn a profit or suffer a loss.

Based on the evidence provided by Plaintiff regarding the similarities shared by the Safety Consultants when working for Apache, the Court granted the Plaintiff’s Motion for Conditional Certification.

If you believe that you have been misclassified as an independent contractor and thus denied overtime pay, you may have a claim to recoup that unpaid overtime compensation. Consider speaking with an experienced overtime attorney. 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.