Opinion
Case No. 3:03 CV 7493
March 15, 2004
ORDER
This is an employment retaliation case brought by plaintiffs Vicki Holliday, Michael Holliday, and Charlene Kelly against defendants Vacationland Federal Credit Union ("VFCU') and Local 913 United Auto Workers Union ("Union"). Pending is defendant VFCU's Fed.R.Civ.P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. For the following reasons, that motion will be denied.
BACKGROUND
Plaintiffs Vicki Holliday and Charlene Kelly are two former managerial employees of defendant VFCU; plaintiff Michael Holliday is a member of defendant Union. Plaintiffs allege that defendants collaborated to pressure plaintiffs Vicki Holliday and Kelly to "engage in practices violative of applicable bylaws and the Federal Credit Union Act, including without limitation facilitating nepotistic hires of Union board members' family members to positions with VFCU." (Doc. 16, at 3). Plaintiffs allege that VFCU demoted plaintiffs Vicki Holliday and Kelly because they refused to engage in such practices, and allege seven claims against defendants: 1) retaliation in violation of public policy; 2) retaliation in violation of the Family and Medical Leave Act ("FMLA"), 29 U.S.C. § 2611 et seq.; 3) willful and wanton misconduct; 4) promissory estoppel; 5) breach of fiduciary duty; 6) breach of duty of fair representation; and 7) tampering with evidence.
Defendant VFCU claims that this court does not have subject matter jurisdiction over the claims plaintiffs assert against it. Only one of plaintiffs' claims raises a question of federal law against VFCU: Vicki Holliday alleges that she was demoted from her managerial position at VFCU in retaliation for her exercise of her rights under the FMLA.
VFCU claims that it does not have the requisite fifty employees to qualify as an "employer" under the FMLA; therefore, the Act does not apply to it. By VFCU's count, it has forty nine employees. By plaintiffs' count, VFCU employs fifty people. At issue is whether Jacob Kreidler, VFCU's part-time courier, qualifies as an "employee" or an "independent contractor." Mr. Kreidler's affidavit, submitted by plaintiffs, establishes that he performs certain tasks according to a work schedule set up with VFCU, including delivering intra-office mail, traveling to and from the title office, and running errands "when so directed by someone at the Credit Union." (Doc. 19, Affidavit of Jacob L. Kreidler, at 1). The affidavit further establishes that Mr. Kreidler does not set his own schedule and is paid based on the same time sheet used by all employees at VFCU. Plaintiffs allege that the facts establish that Mr. Kreidler is an employee of VFCU.
VFCU asserts that, although Mr. Kreidler performs tasks asked of him by VFCU on a regular schedule, as plaintiffs assert, his relation to VFCU is as independent contractor. Mr. Kreidler's second affidavit, submitted by VFCU, explains that VFCU does not deduct taxes from his paychecks and does not require him to join the Union, as it does of all of its employees. Mr. Kreidler states that he is paid according to a formula established by agreement between VFCU and him, and may take as little or as much time as he wishes to complete his work every day. He also asserts that he normally starts his work day at 9:00 a.m., but is not required to do so, and has in the past engaged his son to do his work for him, although he is still paid by VFCU when he makes these arrangements. It is up to him to compensate his son or another substitute for his work if Mr. Kreidler himself does not complete the work for VFCU.
Additionally, Mr. Kreidler states that he uses his own vehicle to perform his services for VFCU and performs the work in the manner he chooses (meaning that he can intersperse his VFCU work with personal errands or other tasks). ( See Doc. 20, Affidavit of Jacob L. Kreidler, at 2-5). VFCU alleges that Mr. Kreidler's work is of the nature of an independent contractor, thereby making the FMLA inapplicable to VFCU.
Plaintiffs' remaining claims are based on state law, with the exception of the breach of duty of fair representation claim, which plaintiffs assert only against the defendant Union. Defendant alleges that there is no common nucleus of operative fact connecting the breach of duty of fair representation claim against the Union to the state law claims plaintiffs assert against VFCU. Thus, VFCU argues, the court must dismiss plaintiffs' federal case against it.
STANDARD OF REVIEW
Rule 12(b)(1) provides that the defendant may file a motion to dismiss based on a "lack of jurisdiction over the subject matter." Fed.R.Civ.P. 12(b)(1). The plaintiff has the burden of proving jurisdiction when subject matter jurisdiction is challenged under 12(b)(1). Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986). In the context of a Rule 12(b)(1) motion, "[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King Spalding, 467 U.S. 69, 73 (1984). A Rule 12(b)(1) motion to dismiss will be granted only if, taking as true all facts alleged by the plaintiff, the court is without subject matter jurisdiction to hear the claim.DISCUSSION
The FMLA entitles eligible employees to take a total of twelve weeks of leave during any twelve month period for any one or more of several family or health reasons. 29 U.S.C. § 2612(a)(1). It also provides that it is "unlawful for any employer to interfere with, restrain, or deny the exercise of . . . any right provided under [the Act.]" 29 U.S.C. § 2615(a)(1). If an employer violates the provisions of the FMLA, the Act grants an employee the right to file a civil action against her employer "in any Federal or State court of competent jurisdiction." 29 U.S.C. § 2617(a)(2).
In the instant case, defendant VFCU claims that, even if all of the facts plaintiffs allege in their complaint are true, these FMLA provisions do not apply to it because it is not an "employer," as defined by the FMLA. 29 U.S.C. § 2611(4)(A) states, in relevant part:
The term "employer" . . . means any person engaged in commerce or in any industry or activity affecting commerce who employs 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year . . .
Because VFCU claims that its alleged fiftieth employee, Mr. Kreidler, is an independent contractor, I must begin my analysis by resolving that underlying issue. See Douglas v. Baldwin Assocs., Inc., 150 F.3d 604, 607-08 (6th Cir. 1998) (holding that an employer must have fifty or more employees to be bound by the FMLA). Only if Mr. Kreidler is properly considered an employee can VFCU be considered an "employer" and plaintiffs' FMLA claim against VFCU proceed.
The Sixth Circuit has expressly adopted the common law agency test to analyze whether a hired party is an independent contractor or an employee. Shah v. Deaconess Hosp., 355 F.3d 496, 499 (6th Cir. 2004). This analysis requires consideration of:
The Sixth Circuit has in the past employed the economic realities test to determine whether a hired party is an employee or an independent contractor. See Lilley v. BTM Corp., 958 F.2d 746, 750 (6th Cir. 1992). In Shah, the court acknowledged that it had used the economic realities test in some of its decisions, but expressly stated that it now prefers the common law agency test. In any event, the court explained that "[t]he substantive differences between the two tests are minimal." 355 F.3d at 499.
1) the hiring party's right to control the manner and means by which the product is accomplished;
2) the skill required by the hired party;
3) the duration of the relationship between the parties;
4) the hiring party's right to assign additional projects;
5) the hired party's discretion over when and how to work;
6) the method of payment;
7) the hired party's role in hiring and paying assistants;
8) whether the work is part of the hiring party's regular business;
9) the hired party's employee benefits; and
10) tax treatment of the hired party's compensation.
Id. at 499-500 (quoting Simpson v. Ernst Young, 100 F.3d 436, 443 (6th Cir. 1996); citing Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323-24 (1992)).
Mr. Kreidler describes his position at VFCU as an independent contractor performing part-time courier services. (Doc. 20, Affidavit of Jacob L. Kreidler, at 1). Mr. Kreidler and VFCU suggest that they have a contractual relationship, though no written memorialization of that arrangement has been submitted to the court. The parties' understanding of their relationship, while indicative of their intentions, is not determinative of Mr. Kreidler's status as an employee or independent contractor. Indeed, the facts reveal that Mr. Kreidler's job has some qualities of both an employee and an independent contractor, but, on balance, the factors weigh more strongly in favor of a finding that Mr. Kreidler is an employee of VFCU.
VFCU controls what tasks Mr. Kreidler will complete each day. It is true, as VFCU points out, that it does not oversee the manner or means by which Mr. Kreidler completes each of his assigned tasks; this lack of control over the manner or means by which the work is completed is characteristic of an independent contractor relationship. Additionally, as would an independent contractor, Mr. Kreidler provides his own automobile to complete his work. These facts, however, are typical where the individual is a courier; alone they are not sufficient to make Mr. Kreidler an independent contractor.
In assessing whether drivers for a courier service were employees or independent contractors, we stated that `initiative, not efficiency determines independence.' [The hired party's] ability to pick his delivery route and work details does not evince sufficient initiative to allow him to be classified as an independent contractor as a matter of law.Hathcock v. Acme Truck Lines, Inc., 262 F.3d 522, 527 (5th Cir. 2001).
Like an employee, Mr. Kreidler needs no particular skills to complete his courier tasks, and his relationship with VFCU is of indefinite duration. Mr. Kreidler states that he has "no particular expectation of a continuing relationship with VFCU" (Doc. 20, Affidavit of Jacob L. Kreidler, at 4), like any employee working under an at-will employment relationship. An independent contractor, on the other hand, typically contractually arranges to complete a particular task within an agreed-upon time period.
VFCU can assign additional projects to Mr. Kreidler, as it would to any employee, and has done so in the past. VFCU also has complete discretion over when and how Mr. Kreidler will complete his work. Mr. Kreidler must report to work every day, except when he finds a substitute. His affidavits make it clear that he has the discretion as to when he completes his tasks on any given day, but he must complete those tasks each day. He is also told where to take deliveries and where to purchase supplies, for which he is given a VFCU credit card.
Mr. Kreidler is paid through VFCU's regular payroll system, for which he submits a time sheet, like all of VFCU's employees. Even when he works more hours than the agreed-upon three per day, he simply submits more hours on his time sheet instead of providing VFCU with a bill, as would an independent contractor.
Like an independent contractor, Mr. Kreidler can assign additional projects to other parties and could hire an assistant if necessary. The reality of his remuneration and the responsibilities of his job, however, make it very unlikely that an assistant would be necessary or profitable. Mr. Kreidler currently earns nine dollars per hour working for VFCU, and completes work — making deliveries, purchasing supplies — intended for one person. Clearly, the parties did not contemplate that anyone other than Mr. Kreidler, or his occasional substitute, would complete his work.
Mr. Kreidler's work is, like an employee's, part of VFCU's regular business. Although he does not do direct bank services work, he completes tasks that were completed by VFCU's managers before he began working as the courier.
Mr. Kreidler receives no employee benefits, which is not unusual for a part-time employee. He receives a 1099 form for income tax purposes, as would an independent contractor, and the defendant does not deduct taxes from his paycheck. This fact appears to arise from VFCU's intention at the initiation of their arrangement that Mr. Kreidler be considered an independent contractor for tax purposes. This fact, however, is not determinative of his status and, when weighed against the other facts establishing the nature of his employment, fails to show, standing alone, that he is an independent contractor for FMLA purposes.
I find that, on balance, the undisputed facts support the conclusion that Mr. Kreidler is an employee of defendant VFCU. Although Mr. Kreidler and VFCU clearly intended that he be designated an independent contractor, the nature of his work indicates that his job is substantively no different than that of any part-time employee. VFCU's attempt to categorize his job otherwise is not persuasive, particularly in light of the fact that the FMLA, like other remedial statutes, should be construed liberally to effectuate its purposes. See Seasongood v. Comm'r of Internal Revenue, 227 F.2d 907, 912 (6th Cir. 1955).
Thus, I conclude that VFCU is an "employer" as defined by 29 U.S.C. § 2611(4)(A) and is subject to the provisions of the FMLA. This court, therefore, has subject matter jurisdiction over defendant VFCU pursuant to 28 U.S.C. § 1331.
CONCLUSION
In light of the foregoing, it is herebyORDERED THAT defendant Vacationland Federal Credit Union's motion to dismiss be, and the same hereby is denied.
So ordered.