Opinion ID: 449644
Heading Depth: 1
Heading Rank: 5

Heading: the home researchers

Text: 27 In its opinion, the district court conceded that three of the six Sureway Cleaners factors, when applied to the home researchers, weighed in favor of the conclusion that they were employees. As the district court stated: 28 It cannot be denied that, for the most part, the investment of these workers was not great, the opportunity for profit and loss was small and the skills required were few. 29 Donovan v. DialAmerica Marketing, Inc., Civil No. 81-4020, letter op. at 7 (D.N.J. Jan. 26, 1984). These findings are not only supported in the record, they are clearly correct. 7 30 The district court devoted most of its discussion, however, to explaining that defendant had very little control over the manner in which the home researchers did their work. The court emphasized that the home researchers had the freedom to work at any time and for as many hours as they desired, and that they were not directly supervised by defendant. See id. at 4-5. 8 Had the district court been analyzing the status of a group of in-house workers, the court's emphasis on these facts would have been appropriate. But in the context of this case--one involving homeworkers--the court's emphasis was misplaced. 31 That the home researchers could generally choose the times during which they would work and were subject to little direct supervision inheres in the very nature of home work. Yet, courts have held consistently that the fact that one works at home is not dispositive of the issue of employee status under the FLSA. In a seminal decision, Goldberg v. Whitaker House Cooperative, 366 U.S. 28, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961), the Supreme Court held that members of a cooperative who made knitted goods in their homes and were paid on a piece-rate basis, 9 were employees under the FLSA. Id. at 33, 81 S.Ct. at 936. The Court examined, inter alia, the legislative history of the FLSA and determined that, in general, homeworkers were intended to be encompassed by the Act. See id. at 30-32, 81 S.Ct. at 935-36. The Court then examined the specific homeworkers at issue and, upon analyzing the economic reality of their whole situation, concluded that they were indeed employees: 32 The members are not self-employed; nor are they independent, selling their products on the market for whatever price they can command. They are regimented under one organization, manufacturing what the organization desires and receiving the compensation the organization dictates. Apart from formal differences, they are engaged in the same work they would be doing whatever the outlet for their products. The management fixes the piece rates at which they work; the management can expel them for substandard work or for failure to obey the regulations. The management, in other words, can hire or fire the homeworkers. 33 Goldberg, 366 U.S. at 32-33, 81 S.Ct. at 936 (footnote omitted). 34 Other federal court rulings have been consistent with Goldberg, holding that homeworkers in various situations were employees under the FLSA. 10 Thus, the facts relied on by the district court in concluding that defendant had only a slight degree of control over the manner in which the home researchers did their work were, to a large extent, insignificant. The district court therefore misapplied and overemphasized the right-to-control factor in its analysis. 35 The district court did not apply two other factors specified in the Sureway Cleaners test: the degree of permanence of the working relationship and whether the service rendered is an integral part of the alleged employer's business. The working relationship between the home researchers and DialAmerica was, for the most part, not a transitory one. Although there was testimony presented that several researchers performed telephone calling services for other organizations following the termination of their work for the defendant, this was not true generally. Moreover, there was no evidence to show that more than three among dozens of home researchers performed similar services for another organization while he or she was working for the defendant. In short, the home researchers did not transfer their services from place to place, as do independent contractors. See Donovan v. Sureway Cleaners, 656 F.2d 1368, 1372 (9th Cir.1981). Each worked continuously for the defendant, and many did so for long periods of time. As such, the permanence-of-working-relationship factor indicates that the home researchers were employees of the defendant. 36 The district court also did not expressly consider whether the service rendered by the home researchers was an integral part of the defendant's business. Given the evidence in the record, we conclude that it was. Although DialAmerica contends that beginning in June 1979, the home researchers accounted for the location of only 4%-5% of the total number of telephone numbers sought by defendant, this contention bears little relevance to the integral-economic-relationship factor. The factor relates not to the percentage of total work done by the workers at issue but to the nature of the work performed by the workers: does that work constitute an essential part of the alleged employer's business? See Sureway Cleaners, 656 F.2d at 1372; Hodgson v. Ellis Transportation Co., 456 F.2d 937, 940 (9th Cir.1972). In other words, regardless of the amount of work done, workers are more likely to be employees under the FLSA if they perform the primary work of the alleged employer. 37 In this case, the primary work of the defendant is locating phone numbers of various people and calling them to sell particular products. The home researchers were engaged in the location of phone numbers, and their work was therefore an integral part of defendant's business. Thus, consideration of the integral-economic-relationship factor also weighs in favor of the conclusion that the home researchers were employees of the defendant. 38 The final consideration included within the Sureway Cleaners test is whether, as a matter of economic reality, the workers at issue  'are dependent upon the business to which they render service.'  Sureway Cleaners, 656 F.2d at 1370, (quoting Bartels v. Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1549, 91 L.Ed. 1947 (1947)). The district court clearly misinterpreted and misapplied this part of the analysis. The court reasoned that, because many of the home researchers used the money they earned from their work only as a secondary source of income for their households, they were not economically dependent upon DialAmerica. There is no legal basis for this position. The economic-dependence aspect of the Sureway Cleaners test does not concern whether the workers at issue depend on the money they earn for obtaining the necessities of life, as the district court suggests. Rather, it examines whether the workers are dependent on a particular business or organization for their continued employment. See Bartels v. Birmingham, 322 U.S. at 130, 67 S.Ct. at 1549; Equal Employment Opportunity Commission v. Zippo Manufacturing Co., 713 F.2d at 37; Usery v. Pilgrim Equipment Co., 527 F.2d 1308, 1311 (5th Cir.), cert. denied, 429 U.S. 826, 97 S.Ct. 82, 50 L.Ed.2d 89 (1976). 11 39 The home researchers in this case were not in a position to offer their services to many different businesses and organizations. They worked on a continuous basis with DialAmerica and were able to work only when and if DialAmerica was in need of their services. Consequently, the home researchers were economically dependent on DialAmerica, indicating that they were indeed employees of the defendant under the FLSA. 40 In summary, of the six factors and one general consideration identified by Sureway Cleaners as the basis for determining employee status, only one factor weighs in favor of the conclusion that the home researchers were not employees. And that factor, the right-to-control factor, was overemphasized by the district court because homeworkers by their very nature are generally subject to little supervision and control by an alleged employer. Federal courts have consistently held homeworkers of many varieties to be employees under the FLSA. 41 Thus, although most of the facts in this case are undisputed and we accord due deference to the district court's findings as to the remaining disputed facts, we nevertheless must conclude, as a matter of law, that the district court erred in holding that the home researchers were not employees of the defendant under the FLSA. Accordingly, we will reverse that portion of the district court's judgment and remand so that the district court may calculate the amount of back pay, if any, to which the home researchers are entitled under the minimum-wage provisions of the Act.