Off-Duty Officers Are Employees, Not Independent Contractors

By Jeffrey Rhodes April 16, 2019
Off-Duty Officers Are Employees, Not Independent Contractors

​Off-duty police officers moonlighting for a traffic and security services company should have been paid overtime as company employees and not treated as independent contractors, the 6th U.S. Circuit Court of Appeals ruled.

Off Duty Police Services Inc. (ODPS) offers private security and traffic control services in the Louisville, Ky., area. The services of its personnel include sitting in a car with emergency lights flashing or directing traffic around a construction zone. Most of the company's workers are sworn officers who work for a law-enforcement entity in addition to working for ODPS. Other workers have no background in law enforcement. Although the company pays sworn officers more per hour, both sworn and nonsworn workers perform similar tasks. Many workers have worked for ODPS for years, some over a decade.

ODPS collects assignments by contracting with businesses in and around Louisville. Schedulers keep track of the customers' work requests and assign them to the officers, who can choose to accept or reject a job. Some workers claimed that if they declined work, the company would discipline them by withholding future assignments.

ODPS coordinates assignments and sometimes provides workers with supplies and equipment necessary for the assignment, including stop-and-go signs, reflective jackets and badge-shaped patches. But workers must pay for other equipment, and all workers must own police-style vehicles, either the police cruiser of a sworn officer or, for nonsworn workers, a Crown Victoria bought with their own money. Sworn officers wear their police uniforms, and nonsworn workers wear police-style uniforms with company patches.

At each jobsite, workers follow the customer's instructions, comply with company-standard policies and occasionally submit to the supervision of other company workers. ODPS management sometimes visits jobsites to inspect the setup and monitor workers' compliance with these policies; management has sometimes disciplined workers for failing to comply with company dress and grooming requirements. The company either pays workers an hourly wage or, on occasion, pays by project.

The U.S. Department of Labor brought suit against ODPS under the Fair Labor Standards Act (FLSA), alleging that the company's workers are employees entitled to overtime pay and that the company violated the FLSA's record-keeping requirements by failing to maintain accurate employment records.

[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

The district court held a four-day bench trial and found that ODPS's nonsworn workers were employees entitled to overtime compensation under the FLSA. The court held, however, that sworn officers were independent contractors because they were economically independent and used ODPS to supplement their incomes. The court also found in favor of the company on the claims of record-keeping violations, as some of the company's records were faulty but not intentionally so.

Both parties appealed. The Department of Labor challenged the district court's decision that ODPS's sworn officers were independent contractors and that the company did not violate the FLSA's record-keeping requirements.

The court of appeals applied the six-factor analysis to decide whether the police officers were employees or independent contractors. It found that all workers were integral to the company's business, performed low-skilled jobs at a set rate of pay for fixed time periods, made only limited investments in specialized equipment, and worked for ODPS consistently over the course of many years—all of which suggested employee status.

The sixth factor—ODPS's right to control workers' performance—favored employee status for the nonsworn workers and, for sworn officers, was evenly balanced between employee and independent contractor status.

Because five of the six factors weighed in favor of sworn officers being treated as employees, and because the FLSA supports a "strikingly broad" definition of "employee," the court found that sworn officers were also employees entitled to overtime pay. The court also found that the FLSA did not require bad intent to establish a violation of its record-keeping requirements.

Thus, the court of appeals reversed the district court's finding that sworn officers were not entitled to overtime pay and imposed liability on ODPS for its record-keeping violations.

Acosta v. Off-Duty Police Services Inc., 6th Cir., Nos. 17-5995/6071 (Feb. 12, 2019).

Professional Pointer: The FLSA's broad definition of "employee" means that employers should exercise extreme caution in characterizing any extended working relationship as an independent contractor arrangement.

Jeffrey Rhodes is an attorney with Doumar Martin in Arlington, Va.



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