principal function of the AMA Sales Director is to "plan, organize, staff, direct and control the activities of the Regional Representatives". Plaintiffs were all Regional Representatives.
On a motion for summary judgment a court "cannot try issues of fact; it can only determine whether there are issues to be tried." Donahue v. Windsor Locks Board of Fire Commissioners, 834 F.2d 54, 58 (2d Cir. 1987). The party seeking summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Rattner v. Netburn, 930 F.2d 204, 209 (2d Cir. 1991).
Contrary to AMA's assertion, the Court concludes that the Second Circuit does not require a different application of legal principles to ADEA and Fair Labor Standards Act ("FLSA") cases. Rather, the Second Circuit appears to have adopted the 'economic realities' standard for determining whether a worker is an employee or an independent contractor regardless of which discrimination statute a party sues under. Brock v. Superior Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988). While it is true that Brock was an FLSA case, FLSA and ADEA have almost identical sections defining "employee". Moreover, since both statutes have a similar purpose, which is to eradicate discrimination, the Court adopts the FLSA standard applied in Brock to this ADEA case. Krijn v. Pogue Simone Real Estate Co., 752 F.Supp 102, 104 n.2 (S.D.N.Y. 1990).
Regardless of which test the Court adopts, however, determining whether plaintiffs are employees or independent contractors is a question of law while the existence and degree of the legal factors considered are questions of fact. Brock v. Superior Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988). Under the economic realities test, there are five factors to consider in determining whether individuals are employees or independent contractors. These factors were first developed in United States v. Silk, 331 U.S. 704, 67 S. Ct. 1463, 91 L. Ed. 1757, 35 A.F.T.R. (P-H) 1174 (1947). The five factors are: (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. 840 F.2d 1054 at 1058-59 . No single factor is conclusive. Instead the court is to look at the factors in the light of the totality of the circumstances. 840 F.2d at 1059. "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". 840 F.2d at 1059.
Applying the five economic factors to this case requires weighing material facts. For example, did plaintiffs each have an opportunity to make a profit and in turn accept the risks involved which comes from being independent? AMA asserts they did, and points to the fact that plaintiffs were not salaried workers but were paid on commission. Plaintiffs allege that they did not have a sufficient opportunity for profit because AMA's business took up all of their time. Furthermore, under their contracts with AMA, plaintiffs were not allowed to compete with AMA's competitors and had to agree to spend all of their available working time promoting AMA's product.
AMA's ability to control plaintiffs' job is the most important of the Brock factors. Plaintiffs contend that AMA decided where plaintiffs could sell AMA's product and prevented plaintiffs from working for any other company in competition with AMA. AMA also provided training and manuals complete with scripts as well as stationary and office supplies. Rather than contesting plaintiffs alleged facts, AMA in its reply brief, directs the Court's attention to a Third Circuit case, EEOC v. Zippo Mfg. Co., 713 F.2d 32 (1983), which held that the same factual allegations relied on by plaintiffs in this case did not prove control over plaintiffs in that case. The Third Circuit, however, is not binding on this Court especially in this case where the Second Circuit's test for determining worker status is different.
Even if the tests were the same and the Third Circuit was binding, the Court would still find the cases distinguishable.
The duration of plaintiffs' working relationship with AMA is another factor which the Court must consider. If a worker's relationship with an employer appears permanent, or continues with little or no interruption for a significant period of time, than that worker's status tips toward employee and away from independent contractor. Plaintiffs in this case appeared to be permanent workers for AMA both before and after AMA terminated its sales department in 1982.
The final factor to consider is whether the workers' jobs are an essential function of AMA's business. While Thomas Horton, Chairman and Chief Executive Officer of AMA, insists that AMA's Field Marketing Division, which plaintiffs were a part of, "never accounted for more than 10% of AMA's total sales volume", (Horton Aff para. 11), William Shaughnessy, a former Vice President of Field Marketing and Sales for AMA, claims the work performed by plaintiffs was "critical" to the business. (Shaughnessy Dep. p. 268). The fact that not even AMA's representatives can agree on the financial importance of the plaintiffs' job demonstrates that material facts are in dispute.
Looking at the totality of the factual circumstances, there exists numerous disputed material facts with respect to the genuine issue of whether plaintiffs were in business for themselves or in business for AMA. Accordingly, AMA's motion is denied.
The parties are directed to complete discovery by no later than May 1, 1992. The pretrial order must be submitted by no later than May 15, 1992, and the final pretrial conference is scheduled for May 26, 1992 at 8:30 a.m.
Dated: New York, New York
January 9, 1992.
LOUIS J. FREEH, U.S.D.J