UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

THOMAS R. DUBOIS; ANTONIA

DUBOIS; HOUNT BATES; JANET

PEARSON; AMJED ALI RASHEED;

DELORIS REED; NIAMATULLAH AZIZI;

MACK EARL STACKHOUSE;

KAREEM D. HOLMES; MOHAMMAD S.

MOFIDI; RONALD F. SCOTT;

ANDRE M. EVANS; JULIA BARTEE;

JOHN D. PARKER; PATRICIA ANN LOY;

CEBRON LETERRIA EVANS; MICHAEL

LIPFORD; STACY STACKHOUSE; FADI

HADAD; TRACIE P. STACKHOUSE;

BOONLERT VARAPUNYO; SIRIPHAN

KANIA VARAPUNYO; NATALIE DAWN

WICKER; TASHIA DIXON; VALERIE

LOVATO; VERONICA RESHEA ROGERS;

No. 97-2074

KEVIN ARTHUR JOHNSON; ELIDA

STARKER; SABRINA WICKER; ALIC

MIRSAD; LASTENIA A. RILEY; FELIX

BERNARDO LUGO; VINCE M.

SANTULLO; KHIEN T. LE; HAROON

MOFIDI, for themselves and other

employees similarly situated at the

Fort Belvoir Commissary,

Plaintiffs-Appellants,

and

DONALD D. TONEY; AMI K.

ANTONIOLI; DANIEL JAMES NORTON;

CALVIN LEE PARKER; MAL YON

WHITE; IMAD B. RASHEED; WATT

JUNIOR LEMAY; JAMES R. NEWSOME;
KENNETH PAUL JONES; HOWARD W.

WELLS; GODFREY S. HASSAN; NAJAT

DOUBY HASSAN; BRENDA L. COLON;

NEKITA DESHAVONE BISHOP; ARTEBIA

ARMWOOD; PRAKOB NARASRI; BUNCHA

NARASRI; BAMRONG THEMRATANA;

WILLIAM L. LAMBERT; MAURICE

HARRIS; TAMIKA THOMAS; JERMAINE

AARON THOMAS; MARVIN J.

WORTHEM; RUSSELL E. MCCOY;

ANTHONY A. SANDERS; OK CHA

HAVERTY; DOUGLAS NEWMAN

HAVERTY; BARBARA JEAN SHIFFLETT;

MOHAMMAD A. MAFIDI; ROY

CARTER; WALLAPHIS SARANWANICH;

JANSUDA PITUKNARATHAM; SHELDON

ARMSTRONG; DIEN H. NGUYEN;

PUANGPET PHERSHAYAPHAI,

Plaintiffs,

v.

SECRETARY OF DEFENSE; RICHARD E.

BEALE, Director, United States

Defense Commissary Agency;

THOMAS M. BRADY, Commander,

United States Army Garrison, Fort

Belvoir,

Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Claude M. Hilton, Chief District Judge.

(CA-96-1105-A)

Argued: May 7, 1998

Decided: September 3, 1998

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Before MURNAGHAN and WILKINS, Circuit Judges, and

BEEZER, Senior Circuit Judge of the

United States Court of Appeals for the Ninth Circuit,

sitting by designation.

_________________________________________________________________

Affirmed by unpublished per curiam opinion. Judge Murnaghan

wrote a dissenting opinion.

_________________________________________________________________

COUNSEL

ARGUED: Claude David Convisser, Alexandria, Virginia, for Appellants. Thomas Mercer Ray, Special Assistant United States Attorney,

Alexandria, Virginia, for Appellees. ON BRIEF: Helen F. Fahey,

United States Attorney, Alexandria, Virginia, for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Plaintiffs-appellants worked at the Fort Belvoir Commissary (the

"Commissary") as grocery baggers ("baggers"). They seek a declaration that they are "employees" of defendant-appellee, the Secretary of

Defense (the "Secretary"), pursuant to the Fair Labor Standards Act

("FLSA"), 29 U.S.C. §§ 201 et seq. Plaintiffs, whose only compensation consists of tips from Commissary customers, contended the Secretary violated FLSA by failing to pay them minimum wage and

overtime pay. Following a bench trial, the district court denied their

claims. We have jurisdiction pursuant to 28 U.S.C.§ 1291, and we

affirm.

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Appellants contend the district court erred in holding they failed to

demonstrate they were "employees" for purposes of FLSA. We

review the district court's findings of fact for clear error. Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 713 (1986) ("[F]acts necessary to a proper determination of the legal question whether an

exemption to the FLSA applies . . . should be reviewed by the courts

of appeals pursuant to [Federal Rule of Civil Procedure] 52(a).").

Under the "clearly erroneous" standard, we must accept the district

court's findings of fact unless upon review we are"left with the definite and firm conviction that a mistake has been committed." United

States v. United States Gypsum Co., 333 U.S. 364, 395 (1948).

Whether plaintiffs should be excluded from FLSA coverage and benefits is a question of law that we review de novo. Icicle Seafoods, 475

U.S. at 714.

Appellants contend they satisfy the "economic reality" test set forth

in Bartels v. Birmingham, 332 U.S. 126 (1947), and United States v.

Silk, 331 U.S. 704 (1947). Under FLSA, "employees are those who

as a matter of economic reality are dependent upon the business to

which they render service." Bartels, 332 U.S. at 130. In determining

whether individuals are "employees" under FLSA, we consider the

degree of control exercised by the employer over the workers; the

workers' opportunity for profit or loss and their investment in the

business; the degree of skill and independent initiative required to

perform the work; the permanence or duration of the working relationship; and the extent to which the work is an integral part of the

employer's business. Silk, 331 U.S. at 716-17 (cited in Brock v. Superior Care, Inc., 840 F.2d 1054, 1058-59 (2d Cir. 1988)); Garrett v.

Phillips Mills, Inc., 721 F.2d 979, 981-82 & n.5 (4th Cir. 1983)

("economic reality" test applies to FLSA claims). The "economic reality" test is based upon the totality of the circumstances, and no single

factor is dispositive. Rutherford Food Corp. v. McComb, 331 U.S.

722, 730 (1947). Appellants challenge the district court's findings of

fact and conclusions of law with respect to the five Bartels/Silk factors; we consider each factor in turn.

With respect to control, the district court found that the degree of

control exercised by the Defense Commissary Agency ("DeCA")

managers over plaintiffs was negligible. The district court found the

testimony demonstrated that the baggers elected a head bagger who

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supervised them and that the baggers voluntarily paid a fee for the

privilege of working as baggers. The head bagger was responsible for

scheduling, hiring, firing and disciplining baggers. The district court

found plaintiffs failed to demonstrate the election of the head bagger

was a "sham election." The district court acknowledged there was evidence that "on occasion certain baggers were asked by DeCA managers to perform tasks such as cleaning and emptying trash in the

checkout area where the baggers work and that on one occasion a

bagger was asked to scrape dried chewing gum from the parking

area." The district court found these requests were made infrequently

and "often when a DeCA manager noticed that baggers were not

attending to trash or a spill that had recently occurred." The district

court also held that evidence that baggers were required by DeCA to

wear uniforms and to load bags so that groceries were not crushed did

not evince control by DeCA. The district court concluded the evidence "simply shows that DeCA managers were attempting to ensure

that baggers did not detract from or otherwise disrupt Commissary

operations."

Appellants contend the district court erred. They claim the Secretary controlled baggers' work conditions by controlling the head bagger, prescribing the policies and rules that the baggers must follow

and compelling baggers to perform work tasks for which they do not

receive tips. Although appellants cite to evidence that tends to support

their assertions, there is also evidence to the contrary. For example,

the Commissary manager testified that the head bagger worked for the

baggers, trained the new baggers and arranged their schedules and

that baggers were not directed or required by Commissary management to perform maintenance tasks. In light of the deferential standard of review, we cannot characterize the factual findings of the

district court as clearly erroneous.

The next factor, the baggers' opportunities for profit and loss and

their investment in their business, was found by the district court to

indicate plaintiffs were not "employees." The district court found that

although the baggers' investment in their business was not "great,"

their opportunity for profit or loss was found to be"entirely dependent on the baggers themselves."

Appellants challenge this finding. Appellants contend their tips

were a function of the volume of customers passing through their

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assigned lane, as determined by whether management chose to keep

the particular lane open and the speed with which the cashier worked.

Appellee contends baggers have opportunity for profit and loss based

on the strength of their own self-employment and their investment of

time and energy put into bagging. Appellee asserts the Commissary

simply allowed the baggers space on the premises and bagging materials with which to bag groceries for patrons. In light of the fact there

is evidence tending to support both appellants' and appellee's views,

the district court's determination concerning plaintiffs' opportunity

for profit and loss is not clearly erroneous.

With respect to the baggers' initiative, the district court found that

the duties of a bagger required independent initiative. The district

court referred to the fact that in order to become a bagger, an individual had to apply for a license and to submit to a background investigation. In addition, baggers had to arrange scheduling with the head

bagger. The district court acknowledged that baggers' duties did not

involve great skill.

Appellants assert the district court erred with respect to these findings concerning initiative. They contend that the reasons cited by the

district court as reflecting initiative--baggers had to apply for the job

and show up for work on their scheduled shifts--are insufficient to

demonstrate initiative. Appellants argue that if these reasons sufficed

to demonstrate initiative, then a worker in virtually any job would be

considered an independent contractor. This argument is somewhat

persuasive, but it does not compel reversal because no single

Bartels/Silk factor is dispositive. Rutherford Food Corp., 331 U.S. at

730.

With respect to the permanence and duration of the working relationship, the district court found that baggers determined when and

how long they wished to work. Baggers could work for months at a

time without a day off or could take several months off and then

return to work. Appellants contend the district court erred because

baggers considered themselves, and the Secretary treated them as,

permanent employees. Appellants point to the fact that baggers who

failed to report to work at scheduled times were subject to discipline

and that baggers were required to report to work on time and to

remain there until the end of their shift. We agree with the district

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court's determination that baggers' flexibility in scheduling indicates

they are not employees.

With respect to the final factor, the district court determined the

work performed by the baggers was not an integral part of the Commissary's business. The district court found that the Commissary's

"mission" was the sale of groceries and that the services performed

by baggers constituted a convenience for patrons who had already

purchased groceries. The baggers' functions were found nonessential

for the sale of groceries.

Appellants contend their work is an integral part of the Commissary's business. They cite to evidence indicating that baggers performed a necessary function at the Commissary and that without them

there would be gridlock. Appellants also point out that their work was

physically integrated into the Commissary premises and operation.

Other evidence, however, suggests that appellants' work was not an

integral part of the Commissary's business. For example, there was

evidence that the baggers satisfied the need of the patrons, not of the

Commissary. The district court's resolution of this issue was not

clearly erroneous.

Because we affirm the district court's decision that plaintiffs are

not Commissary employees under FLSA, we do not address plaintiffs' other contentions.

AFFIRMED

MURNAGHAN, Circuit Judge, dissenting:

The five factors set forth in United States v. Silk, 331 U.S. 704, 716

(1947), give structure to our analysis of whether a group of individuals are employees for purposes of the Fair Labor Standards Act

("FLSA"), 29 U.S.C. §§ 201-19. The touchstone of our inquiry, however, is whether the alleged employees are, "as a matter of economic

reality . . . dependent upon the business to which they render service,"

Bartels v. Birmingham, 332 U.S. 126, 130 (1947), or in business for

themselves. Dole v. Snell, 875 F.2d 802, 804 (10th Cir. 1989). Therefore, no individual factor is dispositive, "nor can the collective

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answers to all of the inquiries produce a resolution which submerges

consideration of the dominant factor--economic dependence." Usery

v. Pilgrim Equip. Co., 527 F.2d 1308, 1311 (5th Cir. 1976); see

Weisel v. Singapore Joint Venture, Inc., 602 F.2d 1185, 1189 (5th Cir.

1979) ("It is often possible for both sides to point to the presence or

absence of particular Silk factors. Yet such an attempt to apply

mechanically the components of Silk represents a distortion of that

case."). After reviewing the five Silk factors with appropriate emphasis on the question of economic dependence, I am compelled to conclude that a number of the district court's factual findings are clearly

erroneous, and that the baggers at the Fort Belvoir Commissary

("Commissary") are employees entitled to FLSA coverage. Commissary baggers are not autonomous entrepreneurs who operate independent businesses. Instead, baggers are closely supervised, unskilled

laborers who earn compensation by performing tasks that are essential

to the efficient operation of the Commissary. Therefore, I dissent

from the majority's holding that the baggers are not employees.1

I cannot agree with the district court and the majority that the

United States Defense Commissary Agency ("DeCA") exercised only

"negligible" control over the baggers. To the contrary, Commissary

managers had a duty to control and manage the bagger operation. See

Bartels, 332 U.S. at 129 (control is "the right to direct what should

_________________________________________________________________

1 Because the majority holds that the baggers are not employees covered by the FLSA, neither they nor I address the scope of a 1978 amendment to the FLSA which excepted individuals performing "bagger or

carryout service" for commissary patrons from the definition of

employee. Department of Defense Appropriation Authorization Act of

1979 § 819, 29 U.S.C. § 203 note. Were we to reach the question, I

would be inclined to hold that the baggers are entitled to FLSA coverage

at least to the extent they performed non-tipped tasks which did not constitute "bagger or carryout service," such as mopping floors.

In the context of our present inquiry, I think it noteworthy that the

1978 amendment was passed in the wake of a controversial finding by

the Civil Service Commission that commissary baggers were employees

under the Silk economic realities test. See A Bill to Amend the Fair Labor

Standards Act: Hearings on H.R. 6256 Before the Subcomm. on Labor

Standards of the House Comm. on Educ. and Labor, 95th Cong. 26-27

(1976).

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be done and how it should be done"). Commissary manager Raymond

Lane testified that he was responsible for "quality assurance" in the

bagger operation, and that his duties encompassed oversight of the

bagger program. Lane's testimony was consistent with a DeCA

"Talking Paper on Commissary Baggers," which commanded Commissary managers to "[c]ontrol and manage the bagger program,"

while reminding Commissary officials to exercise control indirectly,

through the head bagger.2 Lane asserted that he was obligated, as was

any Commissary manager, to address problems with the bagger operation, such as double bagging, improper bagging methods, baggers

"idling about," or spills and breakage, by speaking to the head bagger

or directly to the baggers. While DeCA managers had infrequent

direct contact with baggers, there was substantial evidence that managers frequently gave instructions to the head bagger regarding

detailed aspects of the bagger program. According to Lane, the baggers invariably carried out his instructions.

DeCA also exercised substantial control over the baggers' work

hours. Managers were required to ensure that sufficient baggers were

on duty during the Commissary's hours of operation, and communicated those requirements to the head bagger who then scheduled the

specified number of baggers. Once scheduled to work, baggers were

subject to discipline for failing to report for their shift or leaving

before the end of the shift, even if management closed the checkout

lane to which the bagger had been assigned. The Commissary bagger

Standard Operating Procedure ("SOP"), issued by DeCA, commanded

baggers to "[b]e at work on time," cautioned that "[b]aggers who fail

to report to work at scheduled times or dates will be subject to discipline," and forbade baggers to leave their bagging assignment without

approval.

The DeCA bagger SOP also contained detailed regulations of bagger attire and behavior. DeCA required that baggers wear uniforms,

and baggers were disciplined for failure to comply with the uniform

requirement. Although baggers voted on the uniform, the bagger SOP

gave Commissary management the authority to approve or disapprove

the baggers' selection. The bagger SOP instructed baggers to "[u]se

_________________________________________________________________

2 "It's business as usual -- controlling baggers through the head bagger."

 9
proper grooming" and "demonstrate proper manners," and forbade

them to wear "exposed hair curlers," to "wave or summon patrons to

their particular checkout counter," to talk loudly, and to speak at

length with the cashier.

DeCA's control over the baggers is not rendered insubstantial

merely because DeCA delegated some supervisory authority to the

head bagger. DeCA's bagger SOP contained precise instructions

regarding the head bagger's duties. Although the head bagger had initial responsibility for supervising the baggers' work, Commissary

management had a duty to rectify any problems not identified or corrected by the head bagger. And while the head bagger had some disciplinary authority, the bagger SOP entrusted Commissary managers

with the duty officially to reprimand baggers. Commissary officials

had the sole authority to revoke or suspend a bagger's license. In

short, DeCA exercised significant control over virtually every aspect

of the baggers' work.

With respect to the baggers' opportunity for profit and loss and

their investment in the business, the district court concluded that the

bagger's opportunity for profit or loss was "entirely dependent on the

baggers themselves." That finding cannot be reconciled with evidence

that the baggers' ability to earn tips was substantially affected by the

number of open checkout lanes, the efficiency of cashiers, and the

volume of customers in the store. Baggers had almost no control over

the number of Commissary patrons for whom they bagged groceries,

but only over the manner in which they interacted with the customer

and performed the service. I am unconvinced, moreover, that the bagger's tip income is properly characterized as "profit." Compensation

derived from labor is not commonly referred to as"profit," but as

wages.

The baggers had no investment in the bagging operation or the

business of the Commissary. "[T]he `investment' which must be considered as a factor is the amount of large capital expenditures, such

as risk capital and capital investments, not negligible items, or labor

itself." Dole, 875 F.2d at 810; see Usery, 527 F.2d at 1313-14. And,

having invested nothing but their labor, the baggers had no way to

suffer a loss in the conduct of their allegedly independent business.

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"A reduction in money earned . . . is not a `loss' sufficient to satisfy

the criteria for independent contractor status." Dole, 875 F.2d at 810.

The district court correctly concluded that bagging required no specialized skills, but found that baggers exercised a"not insignificant"

degree of independent initiative. The court based its conclusion on

evidence that individuals must obtain a license before working at the

Commissary, submit to a background investigation, and arrange with

the head bagger to be placed on the schedule. Any person who desires

employment, however, must apply for it, and any civilian who wishes

to work at the Commissary must obtain permission to enter the installation and submit to a background check. The record does not support

a finding that the baggers acted "`with any degree of independence

which would set them apart from what one would consider normal

employee status.'" Baker v. Flint Eng'g & Constr. Co., 137 F.3d

1436, 1441 (10th Cir. 1998) (quoting Dole, 875 F.2d at 806).

The general test of permanency is whether the alleged employees

have a continuous, indefinite relationship with the business they

serve, or whether they have fixed employment periods and transfer

from place to place. See id. at 1442. Commissary baggers do not perform an isolated, finite task, but are hired by the Commissary for an

indefinite period. A number of baggers testified to a lengthy and continuous working relationship with the Commissary. Although some

baggers worked at other jobs, there was no evidence that baggers marketed their services as baggers to other commissaries or commercial

grocery stores. Some flexibility in work schedules does not make baggers independent contractors rather than employees. Doty v. Elias,

733 F.2d 720, 723 (10th Cir. 1984).

Finally, the record fails to support the majority's conclusion that

the baggers were not an integral part of Commissary operations. Lane

testified that baggers were a "necessary" part of the Commissary

operation and agreed that the Commissary would "grind to a halt"

without the baggers. Walter Harris, a Commissary officer, agreed that

baggers were an integral component of the business. Although Harris

said that the Commissary could function if baggers failed to report to

work, he explained that "[w]e would have to pull people from somewhere" on the installation to bag groceries. Philip Koren, DeCA's

Deputy General Counsel for Personnel, testified that the likelihood of

 11
gridlock would be high without baggers. The fact that DeCA officials

perceive baggers as providing an added convenience to patrons does

not contradict or undermine their testimony that the bagging operation

was necessary at the high-volume Commissary. The purpose of the

Commissary is to provide a benefit to its patrons; baggers play an

integral role in achieving that goal.

In sum, I believe the majority's conclusion that Commissary baggers are independent business owners and operators is unfounded.

The only indicia of independence is the baggers' limited flexibility in

determining their work schedules. Otherwise, baggers have none of

the independence or autonomy that characterizes independent contractors. They are, instead, regimented and unskilled workers who

labor for meager compensation. Because I believe the Commissary

baggers are employees within the meaning of the FLSA, I would

reverse and remand for further proceedings.

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