On June 7, 2011, the United States Department of Labor (“DOL”) issued a press release announcing that it had obtained summary judgment on behalf of 57 security guards who had alleged overtime and record keeping abuses against International Detective & Protective Services (“IDPS”) and its owners/officers in violation of the Fair Labor Standards Act.
As a result of the decision, IDPS and its owners and officers will be required to pay more than $200,000 in back wages and liquidated damages and will be permanently enjoined from violating the law going forward. The lawsuit is entitled Solis v. International Detective & Protective Services, et al. and was filed in federal court in the Northern District of Illinois.
In Solis, the DOL alleged that IDPS, which provides security services, had improperly classified security guards as independent contracts rather than employees. As a consequence, the Company admittedly failed to pay the security guards overtime pay for all hours worked over 40 in a week.
In response, Company relied heavily on the “Independent Contractor Contracts,” which were signed by all security guards, stating that they were independent contractors. The Court disregarded the agreements, and instead, held that “The Guards were not in business for themselves but rather worked on IPDS’s behalf and in accordance with IDPS’s rules to provide security services.” Accordingly, the Court found the security guards to be employees rather than independent contractors.
Solis illustrates that an Independent Contractor Agreement is not worth the paper its written on if an employer treats the individual in question as an employee. With that in mind, the courts have instructed employers to consider whether they exercise sufficient control over the contractor or “consultant,” and whether the individual is truly in business for his or herself. This is a difficult hurdle to overcome in proving someone is not an “employee.”