Facts: Ansoumana and 500 other workers brought a class action under the Fair Labor Standards Act (FLSA). Ansoumana and the rest of the class (the plaintiffs) were delivery workers for supermarkets and drugstore chains. The plaintiffs were hired by the Hudson/Chelsea group of defendants and assigned to Duane Reades stores, another defendant. Duane Reade is a large retail drugstore chain in the New York metropolitan area. The plaintiffs would make deliveries to customers on foot and provide general in-store services, as directed by Duane Reade’s store supervisors. Duane Reade paid Hudson/Chelsea $250 to $300 per week, per worker. Hudson/Chelsea would pay the plaintiffs $20-$30 per day as independent contractors. Many of the plaintiffs would work eight to eleven hours a day, six days a week, and were still paid this flat rate; lower than minimum wage and not compensated for overtime as required by FLSA. However, independent contractors do not receive protection under FLSA.
Issues: (1) Whether the Hudson/Chelsea defendants were employers of the plaintiffs. (2) Whether Duane Reade was a joint employer of the plaintiffs.
Holding: Duane Reade and the Hudson/Chelsea defendants were employers of the plaintiffs under FLSA.
Judgment: Duane Reade and the Hudson/Chelsea defendants are jointly and severally obligated for underpayments of minimum wage and overtime.
Reasoning: In answering whether the Hudons/Chelsea defendants were employers of the plaintiffs, the court applied the economic reality test which distinguishes between employees and independent contractors:
1. The degree of control exercised by the employer over the workers;
2. The workers’ opportunity for profit or loss and their investment in the business;
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
“No one factor is dispositive; the ultimate concern is whether, as a matter of economic reality, the workers depend upon someone else’s business for the opportunity to render service or are in business for themselves.”
In answering whether Duane Reade is a joint employer with the Hudson/Chelsea defendants, the court mentioned the economic reality test. The court also applied another four-part test to determine whether Duane Read were “employers” required to pay minimum wages: (1) who hired and fired the works; (2) who supervised and controlled their work schedules and conditions of employment; (3) who determined the rate and method of payment; and (4) who was to maintain employment records.