Court Opinion

ID: 9477085
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:13:16.291793+00
Date Added: 2024-06-11T17:45:40.762024
License: Public Domain

EASTERBROOK, Circuit Judge,
concurring.
Are cucumber pickers “employees” for purposes of the Fair Labor Standards Act? Donovan v. Brandel, 736 F.2d 1114 (6th Cir.1984), says “no” as a matter of law. My colleagues say “yes” as a matter of law. Both opinions march through seven “factors” — each important, none disposi-tive. As the majority puts it: “Certain criteria have been developed to assist in determining the true nature of the relationship, but no criterion is by itself, or by its absence, dispositive or controlling.” At 1534. Courts must examine “all the circumstances” in search of “economic reality.” Ibid.
It is comforting to know that “economic reality” is the touchstone. One cringes to think that courts might decide these cases on the basis of economic fantasy. But “reality” encompasses millions of facts, and unless we have a legal rule with which to sift the material from the immaterial, we might as well examine the facts through a kaleidoscope. Which facts matter, and why? A legal approach calling on judges to examine all of the facts, and balance them, avoids formulating a rule of decision. The price of avoidance should be committing the decisions to the finders of fact, as our inability to fulfill Justice Holmes’s belief that all tort law could be reduced to formulas after some years of experience1 has meant that juries today decide the most complex products liability cases without substantial guidance from legal principles. Surely Holmes was right in believing that legal propositions ought to be in the form of rules to the extent possible. E.g., Aguilera v. Cook County Police and Corrections Merit Board, 760 F.2d 844, 847-48 (7th Cir.1985). Why keep cucumber farmers in the dark about the legal consequences of their deeds?
People are entitled to know the legal rules before they act, and only the most compelling reason should lead a court to announce an approach under which no one can know where he stands until litigation has been completed. Litigation is costly and introduces risk into any endeavor; we should struggle to eliminate the risk and help people save the costs. Unless some obstacle such as inexperience with the subject, a dearth of facts, or a vacuum in the statute books intervenes, we should be able to attach legal consequences to recurrent factual patterns. Courts have had plenty of experience with the application of the FLSA to migrant farm workers. Fifty years after the Act’s passage is too late to say that we still do not have a legal rule to govern these cases. My colleagues’ balancing approach is the prevailing method, which they apply carefully. But it is unsatisfactory both because it offers little guidance for future cases and because any balancing test begs questions about which aspects of “economic reality” matter, and why.
I
Consider the problems with the balancing test. These are not the factors the Restatement (Second) of Agency § 2(3) (1958) suggests for identifying “independent contractors.” The Restatement takes the view that the right to control the physical performance of the job is the central element of status as an independent contractor. My colleagues, joining many other courts, say that this approach is inapplicable because we should “accomplish the remedial purposes of the Act” (at 1534):
Courts, therefore, have not considered the common law concepts of “employee” and “independent contractor” to define the limits of the Act’s coverage. We are *1540seeking, instead, to determine “economic reality.”
This implies that the definition of “independent contractor” used in tort cases is inconsistent with “economic reality” but that the seven factors applied in FLSA cases capture that “reality.” In which way did “economic reality” elude the American Law Institute and the courts of 50 states? What kind of differences between FLSA and tort cases are justified? A definition under which “in the application of social legislation employees are those who as a matter of economic reality are dependent upon the business to which they render service” (Bartels v. Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1549, 91 L.Ed. 1947 (1947)) does not help to isolate the elements of “reality” that matter.
Consider, too, the seven factors my colleagues distill from the cases. The first is the extent to which the supposed employer possesses a right to control the workers’ performance. This is the core of the common law definition. The parties agree that Lauritzen did not prescribe or monitor the migrant workers’ methods of work but instead measured output, the weight and kind of cucumbers picked. Lauritzen did not say who could work but instead negotiated only with the head of each migrant family. Lauritzen did not control how long each member of the family worked. This absence of control over who shall work, when, and how, strongly suggests an independent contractor relation at common law. Cf. United States v. Orleans, 425 U.S. 807, 813-16, 96 S.Ct. 1971, 1975-76, 48 L.Ed.2d 390 (1976) (lack of control over “detailed physical performance” establishes independent contractor status as a matter of law for purposes of the Federal Tort Claims Act). Perhaps Lauritzen could have dictated the workers’ identities and methods, but inferences run in favor of the person opposing the motion for summary judgment.
My colleagues admit that the migrant workers controlled their own working hours and picking methods, but discount these facts on the grounds that what counts is Lauritzen’s “right to control ... the entire pickle-farming operation” (at 1536). If this is so, Pittsburgh Plate Glass must be an “employee” of General Motors because GM controls “the entire automobile manufacturing process” in which windshields from PPG are used. This method of analysis makes everyone an employee.
The second factor is whether the worker has an opportunity to profit (or is exposed to a risk of loss) through the application of managerial skills. My colleagues say that this indicates “employment” here because each worker has “invested nothing except for the cost of ... work gloves, and therefore [has] no investment to lose” (at 1536). But the opportunity to obtain profit from efficient management is not the same as exposing a stock of capital to a risk of loss. (That subject is the third factor, discussed below.) A consultant analyzing the operation of an assembly line also may furnish few tools except for a stopwatch, pencil, and clipboard, but such a person unquestionably is an independent contractor. The “managerial” skill may lie in deploying a work force efficiently. The head of each migrant family decides which family members works, for how long, on what plot of land. That is the same sort of managerial decision customarily made by supervisors in a hierarchical organization.
Third in my colleagues' list is the worker’s investment in equipment or materials, that is, physical capital. The record is clear that the migrant workers possess little or no physical capital.2 This is true of many workers we would call independent contractors. Think of lawyers, many of whom do not even own books. The bar sells human capital rather than physical capital, but this does not imply that lawyers are “employees” of their clients under *1541the FLSA.3
The fourth factor, whether the worker possesses a “special skill,” would exclude lawyers and others rich in human capital. The migrant workers, by contrast, are poor in human capital, so this factor augurs for a conclusion of employment.
Fifth in the list is “the degree of permanency and duration of the working relationship.” This can be measured, but it is hard to see why it is significant. Lawyers may work for years for a single client but be independent contractors; hamburger-turners at fast-food restaurants may drift from one job to the next yet be employees throughout. The migrant workers who picked Lauritzen’s cucumbers labor on many different farms over the course of a year, but work full-time at the pickle operation for more than a month. Surely an engineering consultant who worked full-time on a given job, and frequently worked with a single manufacturer, but did five to ten jobs a year, would be an independent contractor. What matters for the migrant workers: that they have many jobs and float among employers, or that they work full-time for the duration of the harvest? Without a legal theory we cannot tell.
Factor number six, the “extent to which the service rendered is an integral part of the employer’s business,” is one of those bits of “reality” that has neither significance nor meaning. Everything the employer does is “integral” to its business— why else do it? An omission to pick the cucumbers would be fatal to Lauritzen, but then so would an omission to plant the vines or water them. An omission to design a building would be fatal to an effort to build it, but this does not imply that architects are the “employees” of firms that want to erect new buildings. Acquiring tires is integral to the business of Chrysler, but the tires come from independent contractors. Perhaps “integral” in this formulation could mean “part of integrated operation”, which would distinguish tires but leave unanswered the question why the difference should have a legal consequence.
Seventh and finally we have “dependence.” “Economic dependence is more than just another factor. It is instead the focus of all the other considerations.” at 1538. The majority proceeds (id. at 1538, citations omitted):
The district court held that the migrants were economically dependent on the defendants during the harvest season. If the migrant families are pickle pickers, then they need pickles to pick in order to survive economically. The migrants clearly are dependent on the pickle business, and the defendants, for their continued employment and livelihood. That is why many of them return year after year. The defendants contend that skilled migrant families are in demand in the area and do not need the defendants. Were it not for the defendants the migrant families would have to find some other pickle grower who would hire them. Until they found another grower, they would be unemployed. It is not necessary to show that workers are unable to find work with any other employer to find that the workers are employees rather than contractors.
This is the nub of both the district court’s opinion and my colleagues’ approach. Part of it is factually unsupported. There is no evidence that the migrant families pick only pickles or are “dependent on the pickle business.” For all we can tell, these families pick oranges in California, come to Wisconsin to pick cucumbers, and move on to New York to harvest apples. We know they work year-round, and cucumbers are not harvested year-round in the United States. The point of my colleagues’ discussion of factors 2-4 is that these migrant workers are not specialized to pickles.
*1542Now the families may be dependent on the pickle business once they arrive at Lau-ritzen’s farm and settle down to work. If a flood carried away the cucumbers, the migrants would be hard pressed to find other work immediately. This, however, is true of anyone, be he employee or independent contractor. A lawyer engaged full-time on a complex case may take a while to find new business if the case unexpectedly settles. Migrant workers are no more dependent on Lauritzen than are sellers of fertilizer, who rely on the trade of the locality and are in the grip of economic forces beyond their control, and the person who fixes Lauritzen’s irrigation equipment, a classic independent contractor. The conclusion of dependence in this case is an artifact of looking at the subject ex post — that is, after the workers are in the cucumber fields. To determine whether they are dependent on Lauritzen, we have to look at the arrangement ex ante.
The usual argument that workers are “dependent” on employers — frequently a euphemism for a concern about monopsony —is that they are immobile. The coal miner in a company town, the weaver who lives next door to one textile mill and 50 miles from the next, may be offered a wage less than the one that would be necessary to induce a new worker to come to town. The employer takes advantage of the family ties and other things that may fracture some labor markets into small regions, each of which may be less than fully competitive. Migrant workers, by definition, have broken the ties that bind them to one locale. They sell their skills in a national market. It is unlikely that they receive less than the competitive wage. That wage may be low — it will be if the skills they possess are common — and the FLSA may have something to say about that wage. It is not possible, however, to get to that conclusion by talking about “dependence.” Lauritzen is dependent on migrant labor; he cannot move his farm, or change his crop after planting cucumbers. The workers, by contrast, can and will go elsewhere if Lauritzen offers too little money. The majority’s observation when dealing with the fifth “factor” that families come back to Lauritzen year after year, and see 624 F.Supp. at 969, indicates that he offers a satisfactory return on their labor.
So the seven factors are of uncertain import in theory and cut both ways in practice. The list also is curious by its omission. It does not mention the method of compensation. One common feature of an independent contractor relation is compensation by a flat fee (common in the construction business) or a percentage of revenues (the sharecropper and the investment bank). The migrants who picked Lauritzen’s crop received more than half of the proceeds of the sales. True, piecework and commission sales are not inconsistent with status as an “employee,” see Rutherford Food Corp. v. McComb, 331 U.S. 722, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947); Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173 (7th Cir.1987); Silent Woman, Ltd. v. Donovan, 585 F.Supp. 447 (E.D.Wis.1984); but the wrinkle here is that the migrants share the market risk with Lauritzen. Each gets part of the sales price, which may rise or fall with the demand for pickles and the supply of cucumbers each season. If the price collapses, the workers and Lauritzen share the loss; so too they share the gain if the price rises. This is not an ordinary attribute of employment. Employees’ “profit sharing” arrangements rarely provide for loss sharing. Why should this be irrelevant to the status of the migrant workers?
If we are to have multiple factors, we also should have a trial. A fact-bound approach calling for the balancing of incom-mensurables, an approach in which no ascertainable legal rule determines a unique outcome, is one in which the trier of fact plays the principal part. E.g., Wisconsin Real Estate Investment Trust v. Weinstein, 781 F.2d 589, 597-99 (7th Cir.1986). That there is a legal overlay to the factual question does not affect the role of the trier of fact. See Pullman-Standard v. Swint, 456 U.S. 273, 285-90, 102 S.Ct. 1781, 1788-90, 72 L.Ed.2d 66 (1982) (“ultimate” questions); Mucha v. King, 792 F.2d 602, 604-06 (7th Cir.1986) (“mixed” questions). See also Icicle Seafoods, Inc. v. Worthing-*1543ton, 106 S.Ct. 1527 (1986) (applying Rule 52(a) standards to a determination that workers are “seamen” for FLSA purposes); Brock v. Mr. W Fireworks, 814 F.2d 1042, 1044 (5th Cir.1987) (treating the definition of “employee” under the FLSA as one of fact). Given Icicle we cannot readily say, as my colleagues do (at -1535), that the “ultimate conclusion as to whether the workers are employees or independent contractors” is one of law. The drawing of inferences from subordinate to “ultimate” facts is a task for the trier of fact — if, under the governing legal rule, the inferences are subject to legitimate dispute.
II
We should abandon these unfocused “factors” and start again. The language of the statute is the place to start. Section 3(g), 29 U.S.C. § 203(g), defines “employ” as including “to suffer or permit to work”. This is “the broadest definition ‘... ever included in any one act.’ ” United States v. Rosenwasser, 323 U.S. 360, 363 n. 3, 65 S.Ct. 295, 296 n. 3, 89 L.Ed. 301 (1945), quoting from Sen. Hugo Black, the Act’s sponsor, 81 Cong.Rec. 7657 (1937). No wonder the common law definition of “independent contractor” does not govern. Walling v. Portland Terminal Co., 330 U.S. 148, 150-51, 67 S.Ct. 639, 640, 91 L.Ed. 809 (1947); Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1327 (5th Cir.1985). The definition, written in the passive, sweeps in almost any work done on the employer’s premises, potentially any work done for the employer’s benefit or with the employer’s acquiescence.
We have been told to construe this statute broadly. Rutherford Food Corp.; Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 296, 105 S.Ct. 1953, 1959, 85 L.Ed.2d 278 (1985). Knowing the end in view does not answer hard questions, for it does not tell us how far to go in pursuit of that end. Rodriguez v. United States, — U.S.-, 107 S.Ct. 1391, 1393, 94 L.Ed.2d 533 (1987). “[A]lways the question about a ‘remedial’ statute is, how much help was it intended to give the benefited group?” Moore v. Tandy Corp., 819 F.2d 820, 822 (7th Cir.1987) (emphasis in original). See In re Erickson, 815 F.2d 1090 (7th Cir.1987); Walton v. United Consumers Club, Inc., 786 F.2d 303, 310-11 (7th Cir.1986). To know how far is far enough, we must examine the history and functions of the statute.
Unfortunately there is no useful discussion in the legislative debates about the application of the FLSA to agricultural workers. This drives us back to more general purposes — those of the FLSA in general, and those of the common law definition of the independent contractor. Section 2 of the FLSA, 29 U.S.C. § 202, supplies part of the need. Courts are “to correct and as rapidly as practical eliminate”, § 2(b), the “labor conditions detrimental to the maintenance of the minimum standard of living necessary to health, efficiency, and general well-being of workers”, § 2(a). We recently summarized the purposes of the overtime provisions of the FLSA — which turn out to be the important ones here (in conjunction with the child labor provisions) in light of the parties’ apparent belief that the migrant workers regularly earn more than the minimum wage. See Mechmet, 825 F.2d at 1176:
The first purpose was to prevent workers willing (maybe out of desperation ...) to work abnormally long hours from taking jobs away from workers who prefer to work shorter hours. In particular, unions’ efforts to negotiate for overtime provisions in collective bargaining agreements would be undermined if competing, non-union firms were free to hire workers willing to work long hours without overtime. The second purpose was to spread work and thereby reduce unemployment, by requiring the employer to pay a penalty for using fewer workers for the same amount of work as would be necessary if each worker worked a shorter week. The third purpose was to protect the overtime workers from themselves: long hours of work might impair their health or lead to more accidents (which might endanger other workers as well). This purpose may seem inconsistent with allowing overtime work if the *1544employer pays time and a half, but maybe the required premium for overtime pay is intended to assure that workers will at least be compensated for the increased danger of working when tired.
To recite these purposes is not to endorse them; maybe, as Lauritzen says, the FLSA does more harm than good by foreclosing desirable packages of incentives (such as payment by reference to results rather than hours) or by reducing the opportunities for work, and hence the income, of those, such as migrant farm workers, who cannot readily enter white-collar professions and make more money while working fewer hours. The system in place on Lau-ritzen’s farm may be the most efficient yet devised — best for owners, workers, and consumers alike — but whether it is efficient or not is none of our business. The judicial function is to implement what Congress did, not to ask whether Congress did the right thing.4 Id. at 1176.
The purposes Congress identified in § 2 and we amplified in Mechmet strongly suggest that the FLSA applies to migrant farm workers. We also observed in Mech-met that the statute was designed to protect workers without substantial human capital, who therefore earn the lowest wages. No one doubts that migrant farm workers are short on human capital; an occupation that can be learned quickly5 does not pay great rewards.
The functions of the FLSA call for coverage. How about the functions of the independent contractor doctrine? This is a branch of tort law, designed to identify who is answerable for a wrong (and therefore, indirectly, to determine who must take care to prevent injuries). To say “X is an independent contractor” is to say that the chain of vicarious liability runs from X’s employees to X but stops there. This concentrates on X the full incentive to take care. It is the right allocation when X is in the best position to determine what care is appropriate, to take that care, or to spread the risk of loss. See Anderson v. Marathon Petroleum Co., 801 F.2d 936, 938-39 (7th Cir.1986); Alan O. Sykes, The Economics of Vicarious Liability, 93 Yale L.J. 1231 (1984). This usually follows the right to control the work. Someone who surrenders control of the details of the work — often to take advantage of the expertise (= human capital) of someone else —cannot determine what precautions are appropriate; his ignorance may have been the principal reason for hiring the independent contractor. Such a person or firm specifies the outputs (design the building; paint the fence) rather than the inputs. Imposing liability on the person who does not control the execution of the work might induce pointless monitoring.6 All the details of the common law independent contractor doctrine having to do with the right to control the work are addressed to identifying the best monitor and precaution-taker.
The reasons for blocking vicarious liability at a particular point have nothing to do with the functions of the FLSA. The independent contractor will have its own employees, who will be covered by the Act. Electricians are “employees” of someone, even though the electrical subcontractor is not the employee of the general contractor. Indeed, the details of independent contractor relations are fundamentally contractual. Firms can structure their dealings as “employment” or “independent contractor” to maximize the efficiency of incentives to work, monitor, and take precautions. Cf. Moore; Paul H. Rubin, The Theory of the Firm and the Economics of the Franchise Contract, 21 J.L. & Econ. 223 (1978). The *1545FLSA is designed to defeat rather than implement contractual arrangements. If employees voluntarily contract to accept $2.00 per hour, the agreement is ineffectual. See Walton, 786 F.2d at 305-06. In other FLSA cases we have looked past the contractual terms. E.g., Mechmet, 825 F.2d at 1177 (“[w]e attach no weight to the fact that the collective bargaining agreement between the Ritz-Carlton and its waiters describes the waiters’ income from the service charge as a ‘gratuity’ rather than a ‘commission.’ ”). In this sense “economic reality” rather than contractual form is indeed dispositive.
The migrant workers are selling nothing but their labor. They have no physical capital and little human capital to vend. This does not belittle their skills. Willingness to work hard, dedication to a job, honesty, and good health, are valuable traits and all too scarce. Those who possess these traits will find employment; those who do not cannot work (for long) even at the minimum wage in the private sector. But those to whom the FLSA applies must include workers who possess only dedication, honesty, and good health. So the baby-sitter is an “employee” even though working but a few hours a week, and the writer of novels is not an “employee” of the publisher even though renting only human capital. The migrant workers labor on the farmer’s premises, doing repetitive tasks. Payment on a piecework rate (e.g., lc per pound of cucumbers) would not take these workers out of the Act, any more than payment of the sales staff at a department store on commission avoids the statute. The link of the migrants’ compensation to the market price of pickles is not fundamentally different from piecework compensation. Just as the piecework rate may be adjusted in response to the market (e.g., to lc per 1.1 pounds, if the market falls 10%), imposing the market risk on piecework laborers, so the migrants’ percentage share may be adjusted in response to the market (e.g., rising to 55% of the gross if the market should fall 10%) in order to relieve them of market risk. Through such adjustments Lauritzen may end up bearing the whole market risk, and in the long run must do so to attract workers.
There are hard cases under the approach I have limned, but this is not one of them. Migrant farm hands are “employees” under the FLSA — without regard to the crop and the contract in each case. We can, and should, do away with ambulatory balancing in cases of this sort. Once they know how the FLSA works, employers, workers, and Congress have their options. The longer we keep these people in the dark, the more chancy both the interpretive and the amending process become.

. Oliver Wendell Holmes, Jr., The Common Law 111-13, 123-26 (1881).

. Physical capital is not, however, the same thing as a “disproportionately small stake in the pickle-farming operation” (slip op. 13). The laborers’ share of the farm’s gross income exceeds 50%, giving the migrant workers a very large stake indeed in the successful harvest and marketing of the crop. (The migrants receive 50% of Lauritzen’s gross, plus housing and end-of-season bonuses.)

. A story current among electrical engineers has it that after analyzing a destructive harmonic vibration in one of Edison’s new generators, Prof. Steinmetz submitted an invoice for $5,000. An irate Edison demanded itemization. Steinmetz’s new bill said:
I. Telling you to remove the third coil from the top . $10.00
2. Knowing which coil to remove .$4,990.00
Steinmetz, selling only expertise, was the paradigm of an independent contractor.

.Or whether, as seems likely, the parties can cope with a change in the legal rule. If the Act applies, Lauritzen can maintain a system of incentives tied to the price the cucumbers will fetch. The farm must keep records and ensure that the total payment exceeds the statutory minimum; if it does this, the FLSA is indifferent to the device by which the excess is determined.

. The parties dispute whether "quickly" means days or only minutes, but the difference is unimportant for current purposes.

. If the parties could re-contract at no cost about the allocation of damages, of course, it would produce no change at all if both parties were solvent. R.H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1 (1960).