Attention Present and Former Knight Enterprises Cable Installers – You May Be Entitled to Overtime Pay
Knight Enterprises is a full service installer of cable, internet and wireline phone systems. They handle both residential and commercial installations. They claim to be one of the largest, privately owned “communications infrastructure providers in North America”. Unfortunately, we believed they got there by exploiting their workforce.
For years, the company has had a checkered past with its employees. For many, that meant wrongly classifying installers as independent contractors. Companies often do that to avoid minimum wage and overtime rules.
In 2009, two Knight Enterprises installers filed an overtime lawsuit against the company. Michael Scantland and Daniel Lawrence sued the company under the federal Fair Labor Standards Act. That law requires employers to pay their workers minimum wage and time and one half for all hours over 40 worked during a 7 day period.
The two men filed their lawsuit as class or collective action. That means it was filed on behalf of all installers in Florida. A judge tossed their claim after finding they were independent contractors.
The men appealed. In 2013, a three judge panel of the United States Court of Appeals reversed and ruled in favor of the installers.
Knight Enterprises Loses Federal Appeals Court Decision
Although the trial judge tossed their claims, the two technicians didn’t give up.
A three judge appeals court decided the appeal in 2013. The court first discussed the Fair Labor Standards Act. Passed during the Great Depression, the Act or FLSA as it is sometimes called was Congress’ response to businesses who were exploited desperate workers in the wake of Depression.
The Act requires businesses to pay minimum wages and for most workers, premium pay (time and one half) for all hours worked over 40 hours in a week. The law applies to employees but not independent contractors.
It is isn’t surprising that many businesses try to classify workers as contractors to avoid benefits, Family Medical Leave, health insurance and overtime.
Adding to the confusion, the legal definition of an “employee” varies between agencies. The IRS test is different from the Department of Labor (unemployment) which is different from the FLSA test. For our purposes, we will just consider the definition of “employ” for overtime purposes.
To determine whether a worker falls into the category of “employee” or “independent contractor,” courts use an “economic reality test. The 11th Circuit Court of Appeals in examining the Knight Enterprises case specifically noted, “The inquiry is not governed by the label put on the relationship” by the employer. Instead it focuses on the actual work done by the worker and who controls that work.
That means your boss or contractor agreement doesn’t determine whether you are an employee entitled to overtime pay.
Six Factor Economic Reality Test (Independent Contractor vs Employee)
Courts generally look at six factors when determining whether a worker is an employee or contractor. Those factors are:
- the nature and degree of the employer’s control as to the manner in which the work is performed
- the worker’s opportunity for profit or loss
- the worker’s investment in equipment or materials
- whether the service rendered requires a special skill
- the degree of permanency and duration of the working relationship
- the extent to which the service rendered is an integral part of the employer’s business
No one factor is controlling nor does a worker have to meet every test in order to be deemed an employee entitled to overtime.
In the Knight Enterprises case, the court found that the company exercised significant control over the workers. They set their hours and order in which they performed installations. The installers would also have to report to a Knight facility each morning to get equipment for that day and return any equipment from the prior day.
On paper, a technician could refuse a specific job because it was far away or unprofitable but in reality, they would be terminated or just not receive further assignments. In other words, if you wanted work, you did everything you were told by Knight Enterprises.
Another factor weighing in for the workers was Knight’s requirement that installers could not work for other companies.
Workers were also “levied uncontestable fines called ‘chargebacks’ for not meeting specifications.” Normally the remedy for a contractor not getting the job done properly is actual damages. The fine system showed just how much control Knight exercised over its supposedly “independent” technicians.
Unfortunately for the technicians, they were consistently required to work 6 or 7 days a week and more than 40 hours during that week. And they didn’t get overtime.
They also could not negotiate prices for jobs.
Because they could not negotiate prices for their work, the court determined that there was little opportunity for profit or loss. It didn’t matter how good you were, compensation was based on how many jobs you did.
Next the court looked at the worker’s investment in tools and equipment. The court found that was a wash. The evidence didn’t help the employer or the worker.
As to the duration and permanency of the relationship, once again the court sided with the installers. The “independent contractor” agreements were for terms of years and not for each job. They also renewed automatically.
Another factor weighing in favor of employee classification was that he relationship was that the contractors could not work for anyone else.
In the end, the court ruled that the installers were employees and not contractors.
Class Action or Individual Claim?
Knight Enterprises does business in several southern states. The federal appeals court noted they employ 100’s of installers.
Normally wage theft claims are handled in court through a class action. It is much easier to find a lawyer to take 100 cases with the same facts than it is to one willing to take a single case. Employers know this and have made much more difficult for workers to get properly paid.
Greedy employers get away without not paying workers by placing “class action waivers” and arbitration clauses in their subcontracting agreements. In other words, not only do they lie to workers and claim that they are not employees, they also forbid them from filing lawsuits or participating in a class action lawsuit.
The Knight Enterprises agreement we have seen has an arbitration clause that says,
“It is the desire of the parties that any controversy or claim of any nature, arising out of or in any way related to any Dispute shall be referred to and finally resolved by arbitration in Tampa, Florida, in accordance with the Commercial Law Arbitration Rules of the American Arbitration Association.”
Knight Enterprises was savvy enough to know they can’t stop an installer from filing a complaint with the EEOC or Department of Labor. In an incredibly selfish move, however, they precluded the aggrieved worker from collecting any damages. In other words, you can’t contract away your rights to report illegal behavior to the authorities but you can waive your right to receive damages.
Companies know that nobody would contact the authorities if they knew they couldn’t collect any money even if they won!
Not only must installers arbitrate claims, they give up their right to a jury.
Their class action arbitration clause is equally insidious. It says,
“Any claim must be brought in the respective party’s individual capacity and not as a plaintiff or class member in any purported class [action].
Does this mean installers and technicians working for Knight Enterprises are out-of-luck? Of course not. Workers can still arbitrate their claims against the company. While we prefer litigating these cases in court and in front of a jury, it is still possible for the average Joe to win.
MahanyLaw is Actively Seeking Knight Enterprises Installers and Technicians
Knight Enterprises was successfully sued by installers. Instead of cleaning up their act and treating workers better, they apparently redrafted their contracts to better escape taking responsibility for their wrongdoing.
What can you do? Plenty! We are actively looking for active and recently separated Knight Enterprises workers who believe they did not receive proper overtime.
We take individual wage theft cases, even if they must be arbitrated. Whether in a courthouse or a mediation room, FLSA provided that workers successfully making a claim are eligible for double back pay, future pay and attorney’s fee too.
We never charge for our services unless we win. If you don’t win and recover money, you owe us nothing.
You work hard at your job. Don’t let a greedy employer lie about your independent contractor status. Remember, your proper classification has nothing to do with your title. Simply because your boss tells you that you are exempt from overtime does not mean it is true.
Looking for more information? Visit our FLSA wage theft page or our blog post on cable installers. Ready to see if you have a case? Contact us online, by email or by phone at 414-704-6731.
All calls protected by the attorney client privilege and kept strictly confidential.