Real v. Driscoll Strawberry Associates, Inc.
51 A.L.R. Fed. 689, 24 Wage & Hour Cas. (BNA) 279, 603 F.2d 748 (1979)
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Rule of Law:
Whether a worker is an employee under the Fair Labor Standards Act (FLSA) is determined by the economic realities of the working relationship, not by contractual labels or the subjective intent of the parties.
Facts:
- Driscoll Strawberry Associates, Inc. (DSA) owns patents on specific varieties of strawberries and contracts with growers like Donald J. Driscoll to produce them.
- Driscoll entered into identical 'Patent Sublicense and Subcontract' agreements, provided by DSA, with a class of Mexican-American growers.
- These agreements labeled the growers as 'Sub-Licensees' and 'independent contractors,' while specifying that DSA owned the strawberry plants and the resulting crop at all times.
- Driscoll prepared the land and supplied the plants, irrigation, fertilizers, insecticides, and heavy machinery.
- The growers' contribution consisted primarily of their physical labor and ownership of small hand tools like hoes, shovels, and picking carts.
- The growers were responsible for cultivating, weeding, harvesting, and packing the strawberries.
- DSA's inspectors graded the berries, and DSA alone controlled the marketing, pricing, and sale of the entire crop.
- The growers were paid a percentage of the 'net proceeds' that Driscoll received from DSA, but the growers had no knowledge of or control over how DSA determined the price.
Procedural Posture:
- Fifteen individual plaintiffs, representing a class, sued Driscoll Strawberry Associates, Inc. (DSA) and Donald J. Driscoll in federal district court.
- The plaintiffs initially filed a complaint alleging antitrust and contract violations.
- The plaintiffs later amended their complaint to add a claim under the Fair Labor Standards Act (FLSA), alleging they were employees who were not paid minimum wage.
- DSA and Driscoll filed a motion for summary judgment on all counts.
- The district court granted the defendants' motion for summary judgment, dismissing the entire case.
- The plaintiffs (appellants) appealed the dismissal of their FLSA claim to the United States Court of Appeals for the Ninth Circuit.
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Issue:
Does a genuine issue of material fact exist as to whether strawberry growers are 'employees' under the Fair Labor Standards Act, despite signing contracts labeling them as 'independent contractors,' when considering the economic realities of their working relationship?
Opinions:
Majority - Bright, J.
Yes. A genuine issue of material fact exists because under the FLSA, employment status is determined by the economic realities of the situation, not by contractual labels. The court found that the record contained substantial evidence undercutting the claim that the growers were independent contractors. Applying the multi-factor 'economic reality' test, the court noted that Driscoll and DSA exercised significant control over the growers' work, the growers' opportunity for profit depended more on DSA's and Driscoll's managerial skills than their own, their investment was minimal compared to the total operation, and their labor was an integral part of the business. Therefore, summary judgment was inappropriate, and the case must proceed to trial to determine if the growers are employees of Driscoll, DSA, or both.
Analysis:
This case reinforces the principle that the broad, remedial purposes of the Fair Labor Standards Act cannot be circumvented by contractual language. It solidifies the use of the multi-factor 'economic reality' test over common law agency principles in determining employment status under the FLSA. The decision highlights that courts will look past labels like 'independent contractor' to analyze the substance of the relationship, focusing on factors like control, investment, and economic dependence. This precedent makes it more difficult for employers to misclassify workers through complex subcontracting arrangements, particularly in agriculture, and affirms the possibility of 'joint employer' liability where multiple entities benefit from and control a worker's labor.
