By Robert S. Whitman and Howard M. Wexler, of Seyfarth Shaw LLP
Earlier this year, the Second Circuit awarded game, set and match to the U.S. Tennis Association in a challenge to the independent contractor status of the tournament’s umpires. In Meyer v. USTA, which we previously wrote about here, the court upheld a District Court’s 2014 ruling that the umpires were properly classified as contractors, not employees, under the FLSA and NY Labor Law.
The plaintiffs in Meyer were umpires who worked at the U.S. Open pursuant to independent contractor agreements prepared by the USTA. Each umpire received a fixed daily rate (between $115 and $200) as well as reimbursement for some travel, meal and equipment costs. They filed a putative class/collective action alleging that they should have been classified as employees, and thus were entitled to overtime pay.
The District Court applied the “economic reality” test for whether the umpires were employees or independent contractors under the FLSA. The factors were: (1) the degree of control exercised by the putative employer; (2) the workers’ opportunity for profit or loss; (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. Based on a review of these factors, the District Court declared held that the USTA aced the misclassification test and that the chair umpires were properly classified. It reached the same conclusion under the New York Labor Law as well.
Similar to the “Hawk-Eye” review system used to review chair umpire calls during the U.S. Open, the Second Circuit undertook a de novo review and the USTA held serve by getting the decision affirmed. In relevant part, the Court noted:
The umpires exercise a high degree of independent initiative and control in officiating tennis matches;
They are free to decide independently each year whether to apply to officiate at the U.S. Open, which lasts only a few weeks, as well as which days they wish to officiate;
They are free to serve as umpires for other tennis associations, and maintain other non-umpiring jobs throughout the year;
They do not receive fringe benefits and are not on the USTA’s payroll; and
They generally claimed independent contractor status on their income tax returns.
This was by no means a straight-sets victory for the USTA given the litigation costs it incurred and risks it faced in the event the Second Circuit held that the District Court double-faulted in reaching its decision. The case should be an object lesson for employers: the mere fact that a worker is labeled an “independent contractor” and willing to work as such (without receiving minimum wage or an overtime premium) is not by itself enough to remove the worker from the coverage of wage-hour laws. Careful compliance for employers in classifying workers as independent contractors rather than employees, with an eye toward eliminating any unforced errors, remains as important as ever.
