Tuesday, October 8, 2013

Donovan v. Dialamerica Marketing, Inc. case brief summary

Donovan v. Dialamerica Marketing, Inc. case brief summary
757 F.2d 1376

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Defendant employer sold magazine subscription renewals over the telephone and hired home researchers to discover correct telephone numbers. It also allowed home distributors to pick up and deliver work to the researchers and to recruit new researchers. Plaintiff Secretary of Labor brought an action under the Fair Labor Standards Act (FLSA), asserting that defendant failed to pay the minimum wage or to keep required records.

The trial court found for defendant and plaintiff appealed.

The court affirmed in part, finding that the distributors were independent contractors who exhibited management skills and who risked their own profit or loss. The court reversed the holding as to the researchers, however, finding that they were "employees" under the FLSA because of the relative permanence of their working relationship with defendant and because their services were integral to defendant's business. The court remanded for a calculation of the researchers' back pay. The court also affirmed the denial of attorney fees to defendant under the Equal Access to Justice Act,  because plaintiff's position was substantially justified.

The court affirmed the ruling that defendant employer's home distributors were independent contractors but reversed the ruling that the home researchers were also such, finding that instead they were employees who were entitled to earn the minimum wage. The court remanded for a calculation of the back pay to be awarded.
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