I love irony. I can’t resist pointing it out. So how’s this for some irony? The Pennsylvania Interscholastic Athletic Association just agreed to pay $260,000 to settle allegations in a class/collective action lawsuit that it misclassified its referees as independent contractors. What’s the irony? The referees, whose job it is to apply established rules and settle disputes, looked to the federal courts to apply established rules to resolve their claims that the PIAA wasn’t treating them fairly. I guess even referees sometimes need a referee themselves. Let’s have a look at the allegations and, of course, what employers can learn from both the case and the settlement.
The Pennsylvania Interscholastic Authority Association (PIAA) was established in 1913 by a group of high school principals looking to ” eliminate abuses, establish uniform rules, and place interscholastic athletics in the overall context of secondary education.” It assists middle school, junior high school, intermediate school, and senior high school students in participating in interscholastic athletic programs. It covers most sports, including most sports, including basketball, bowling, gymnastics, indoor track and field, rifle, swimming and diving, wrestling, baseball, lacrosse, softball,tennis, track and field, volleyball, cross country, field hockey, football, golf, soccer, and water polo. To accomplish its goals, the PIAA engages sports officials, aka referees.
According to the lawsuit’s Complaint, referees work, are trained and paid at the direction of the PIAA. (See where this is going? Hang in there, you will soon). According to the referees, ” every aspect of the Class Members’ jobs are controlled and determined by PIAA, down to their uniforms worn and locations they stand of the field during sporting events.” The PIAA apparently has many rules, and referees can be penalized for not following them. According to the plaintiffs, referees have no way of meaningfully affecting their profit or loss, do not operate as a separate business, cannot control operations of the PIAA, including scheduling of games or events. The Complaint goes into more detail. You can find that here if you are interested. The bottom line is that the referees alleged sufficient degree of control by the PIAA to state a claim that they are employees. The PIAA however called them independent contractors.
Now, it might not have mattered so much what the PIAA called the referees if they felt they were paid everything they should be paid. The referees, however, alleged that such was not the case. They were paid a flat fee per game, and often required to attend additional events for which they were not paid, which, they in turn allege, rendered the per-game pay below minimum wage. According to the referees, often the hours spent refereeing games plus those spent attending mandatory events added up to more than 40 in a week, and so, they would have been entitled to overtime pay as well. The referees also cite a 2017 NLRB decision finding that they were employees and not independent contractors.
The PIAA raised two alternative arguments: 1. They are independent contractors because they are not supervised while refereeing, they provide their own tools, the duration of their work is short, freedom to officiate at times and fees of their own choosing, and mutual understanding of their IC relationship and 2. If they are employees they are exempt under the seasonal/recreational employee exemptions. Some of the PIAA’s first argument indicates a factual dispute. Had the case gone to trial the court would have had to make findings as to whether they in fact had control over their fees and what events they refereed. In any case though, “mutual understanding” would not be a valid argument. FLSA rights are not waivable. Even if the PIAA had the referees sign an agreement acknowledging they were independent contractors, if they were really employees then that agreement — or at least that clause in any agreement– would be unenforceable. If the referees were correct that as to all other aspects of their job and relationship with the PIAA, the mere fact that the PIAA doesn’t stand over the referees during games, telling them how to referee would not be enough to make them independent contractors. Whether interscholastic sports would qualify as seasonal establishments, whether profits, if any, are within the exemption’s criteria is beyond the scope of this post. It doesn’t matter, at this point, because the parties reached a settlement.
The takeaways here don’t differ a whole lot from those in any misclassification case. Since, however, this is an area of law that is complex, contentious and rather nuanced, it doesn’t hurt to reiterate them now. So here they are:
- The more constraints you place upon a worker doing a job for you, the greater likelihood s/he is an employee;
- Remember, that under the FLSA the presumption is that the worker is an employee. That means that you, the employer/client, need enough facts/evidence to rebut that presumption;
- It’s not enough to have an agreement stating that workers are independent contractors. Saying it’s so doesn’t make it so, and rights under the FLSA cannot be waived — ever.
- Just because you don’t supervise every detail of work doesn’t mean the employee is an independent contractor.
- The tests for determining independent contractor v employee involve a number of factors. Making the determining involves a very fact-specific analysis. There is no one-size-fits-all approach. Determination is based on totality of the circumstances rather than any one factor.
- When in doubt assume the worker is an employee, pay minimum wage, and if the employee works more than 40 hours in a week pay overtime (1.5 times the employee’s regular hourly rate) for each hour exceeding 40 in a given week. If you choose to misclassify the employee, you may be on the hook for all straight-time and overtime pay, plus liquidated damages in the same amount, plus the employee’s attorney fees–in addition to your own legal fees.
- Finally, check the laws in each state where you have people working to make sure you are complying with those as well.
I guess that about covers it. Bye for now!
Watch my first of two television interviews on Stop My Crisis with Vivian Gaspar.
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