LAW REVIEW 1053
Calling You an Independent Contractor Does Not Make You One
By Captain Samuel F. Wright, JAGC, USN (Ret.)
220.127.116.11—Coverage of Independent
Contractors and Partners
Evans v. MassMutual
Financial Group, 187 L.R.R.M. (BNA) 2664, 158 Lab.
Cas. (CCH) Par. 10099, 2009 WL 3614534 (W.D.N.Y. Oct. 23, 2009).
reemployment rights under the Uniformed Services Employment and Reemployment
Rights Act (USERRA), you must have left a position
of employment for the purpose of performing voluntary or involuntary
service in the uniformed services (anything from five hours to five years), you
must have given the employer prior oral or written notice, you must not have
exceeded the cumulative five-year limit on the duration of the period or
periods of uniformed service related to the employer relationship for which you
seek reemployment, you must have been released from the period of service
without having received a punitive or other-than-honorable discharge, and you
must have made a timely application for reemployment with the pre-service
employer after release from the period of service. In this case, there is no question that Andrae
Evans (a Major in the New York Army National Guard) meets conditions 2-5. The big question is whether his pre-service
employment as a life insurance salesman amounted to a position of employment for USERRA purposes.
applied for a position selling life insurance for MassMutual (a corporation
headquartered in Massachusetts) at its office in Rochester, New York.
Like Evans, the MassMutual general agent in Rochester was a member of the Army National
Guard. The form contract that Evans
signed with MassMutual (a contract drafted by the company and not subject to
negotiation with the individual) characterized his status as an “independent
contractor” rather than an employee. He
worked in that capacity for several months before he was called to active duty
and deployed to Afghanistan.
While he was in Afghanistan, MassMutual terminated the general
agent who had hired Evans and replaced him with a man who had never served in
the armed forces.
Evans was released from active duty, he made a timely application for
reemployment at the MassMutual office in Rochester, but he was not reemployed. MassMutual and the Rochester general agent insisted that USERRA
did not apply because Evans had been an independent contractor and not an
employee. This is the case that I had in
mind when I wrote Law Review 0905 (Jan. 2009), titled “Do Life Insurance Agents
Have USERRA Rights?” I invite the
reader’s attention to www.roa.org/law_review.
You will find more than 700 articles about USERRA and other laws that
are particularly pertinent to those who serve our nation in uniform, and you
will find a detailed Subject Index to facilitate finding articles about very
retained Tully Rinckey PLLC, a law firm in Albany, New York and Washington, DC.
I was a partner with that firm until I resigned in May 2009 to join the
ROA staff as the first Director of the Service Members Law Center.
Rinckey filed suit on Major Evans’ behalf in the United States District Court
for the Western District of New York, Rochester Division. In lieu of filing an answer, MassMutual and
the Rochester general agent filed a motion to
dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. To get a case dismissed under that rule, a
defendant must demonstrate that even
assuming that everything the plaintiff alleges is true, the plaintiff is not
entitled to relief that the court can award.
motion to dismiss and accompanying brief, MassMutual pointed out that the
agreements that Evans had signed characterized his status as that of an
independent contractor, that a New York Court of Appeals (high court of the
state) published decision had characterized life insurance salesmen as
independent contractors for New York State law purposes, and that the Equal
Employment Opportunity Commission (EEOC) had determined that life insurance
salesmen were independent contractors, rather than employees, for purposes of
Title VII of the Civil Rights Act of 1964 (the
law that forbids discrimination in employment on the basis of race, color, sex,
religion, or national origin).
well-written decision by Judge Charles J. Siragusa of the United States
District Court for the Western District of New York, the court firmly rejected
these employer arguments, at least for Rule 12(b)(6) purposes. Judge Siragusa held that he could not
consider the agreements between Evans and MassMutual because Evans had not relied on those agreements in drafting
the Complaint, although he had a copy of the agreements in his possession. More importantly, in footnote 3 Judge
Siragusa wrote: “Even if the Court could
consider the agreements it would still deny the motion to dismiss, since the
issue is not how the parties characterized the employment relationship, but
rather, is whether Plaintiff qualifies as an employee under USERRA based on the
economic realities of the employment arrangement. On that point, there are issues of fact which
cannot be determined from the Complaint or the agreements.”
Siragusa also firmly rejected MassMutual’s argument that the New York Court of
Appeals characterization of life insurance salesmen as independent contractors
for state law purposes and the EEOC’s characterization of them as independent contractors
for Title VII purposes is binding on the determination of whether life insurance
salesman Andrae Evans was an employee for
USERRA purposes. “Lastly, Defendants
maintain that the Complaint must be dismissed because under New York State law insurance agents are deemed to
be independent contractors, and because the EEOC has determined that some
MassMutual agents were not employees for purposes of Title VII.
The Court rejects both arguments, since New York State law appears to
have no relevance to this case, and since Title VII employs a much narrower definition
of ‘employee’ than does the Fair Labor Standards Act (FLSA), and by extension
800,000 National Guard and Reserve personnel have been called to the colors
since the terrorist attacks of Sept. 11, 2001, and some of them (including Andrae
Evans) have been called multiple times.
At least a few hundred of those 800,000 individuals were employed as
insurance salesmen before they were called to the colors. In its first case construing the Veterans’
Reemployment Rights Act (VRRA), which can be traced back to 1940, the Supreme
Court held that the law is to be “liberally construed for the benefit of those
who left private life to serve their country in its hour of great need.” Fishgold
v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 285 (1946). Applying this liberal construction to the
question of USERRA coverage of insurance salesmen like Andrae Evans, USERRA
should be held to apply. Insurance salesmen
like Andrae Evans should have the same rights as mobilized National Guard and
Reserve personnel who had been employed as teachers, clerks, and candlestick
makers, and in thousands of other occupations and job classifications.
enacted USERRA in 1994, as a long-overdue recodification of the 1940 VRRA. USERRA’s legislative history makes clear that
the VRRA case law is to be applied in determining the meaning of USERRA
provisions: “The provisions of Federal
law providing members of the uniformed services with employment and
reemployment rights, protections against employment-related discrimination, and
the protection of certain other rights and benefits have been eminently
successful for over fifty years.
Therefore, the Committee [House Committee on Veterans’ Affairs] wishes
to stress that the extensive body of case law that has evolved over that
period, to the extent that it is consistent with the provisions of this Act
[USERRA], remains in full force and effect in interpreting these provisions. This is particularly true of the basic
principle established by the Supreme Court that the Act is to be ‘liberally
construed.’ See Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 285 (1946); Alabama Power Co. v. Davis, 431 U.S. 581, 584 (1977).” House Rep. No. 103-65, 1994 United States Code Congressional & Administrative News (USCCAN) 2449, 2452.
legislative history makes clear the intent of Congress that the distinction
between employees and independent contractors is to be made based on the same
expansive treatment afforded under the Fair Labor Standards Act (FLSA), citing Brock v. Mr. W Fireworks, Inc., 814 F.2d
1042 (5th Cir. 1987). 1994 USCCAN at 2454. In that case, the “independent businessmen”
who sold fireworks for Mr. W Fireworks Company were determined to be employees
of the company. The Fifth Circuit
(federal appellate court for Louisiana, Mississippi, and Texas) held that the economic realities of
the arrangement controlled, not the form of the arrangement or the wording of
boilerplate agreements that the fireworks stand operators had signed. Applying this same liberal construction here,
Andrae Evans was an employee of MassMutual and not an independent contractor.
We will keep the
readers informed of future developments in this and other cases on the
important question of whether insurance salesmen have USERRA rights as
employees. If you have a case involving
a similar issue, please let me hear from you at 800-809-9448, extension 730, or SWright@roa.org.
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