The District of Columbia Court of Appeals has sided with Regina Kennedy, a former Direct Support Professional (DSP) who worked for Eckington House Mental Health Services, LLC (Eckington). The court affirmed a ruling that Ms. Kennedy was an employee, not an independent contractor, and therefore entitled to overtime wages and liquidated damages under the District of Columbia Minimum Wage Act (DCMWA).
The case centers on the classification of Ms. Kennedy’s employment with Eckington, which provides care for individuals with intellectual and developmental disabilities. Eckington argued that Ms. Kennedy was an independent contractor, while she claimed she was an employee and should have received overtime pay for working more than 40 hours a week.
Background of the Case
Ms. Kennedy worked for Eckington as a DSP from August 2020 to May 2021. In June 2021, she filed a complaint with the Office of Wage-Hour (OWH), alleging that she was not paid overtime wages for the period from November 26, 2020, to May 21, 2021. The OWH initially found in her favor, determining that Eckington owed her unpaid overtime and liquidated damages, along with a penalty.
Eckington appealed this decision to the Office of Administrative Hearings (OAH). An Administrative Law Judge (ALJ) upheld the findings of unpaid wages and damages, but reversed the penalty assessment. Eckington then took the case to the District of Columbia Court of Appeals.
The Legal Framework: The “Economic Reality” Test
The court’s decision hinged on the interpretation of the DCMWA, which defines “employee” broadly. To determine whether Ms. Kennedy was an employee or an independent contractor, the court applied the “economic reality” test, a framework used in similar cases involving the Fair Labor Standards Act (FLSA) and the Wage Payment and Collection Law (WPCL). The court emphasized that these laws are “construed consistently” when determining employee classification.
This test considers several factors, often referred to as the “Steinke factors,” to assess the nature of the working relationship:
* The employer’s control over how the work is done.
* The worker’s opportunity for profit or loss.
* The worker’s investment in equipment or materials.
* Whether the service requires a special skill.
* The permanency and duration of the working relationship.
* The extent to which the service is integral to the employer’s business.
* Whether the work is part of the regular business of the principal.
* Whether the parties believed they were creating an employer-employee relationship.
The Court’s Analysis: Weighing the Factors
The court carefully examined each of the Steinke factors in light of the evidence presented.
The court gave significant weight to the eighth factor, which focused on the parties’ understanding of the relationship. Eckington argued that a “New Hire” letter, which labeled Ms. Kennedy as an independent contractor, should be the controlling factor. However, the court found that this label was not decisive.
The court noted that the letter “set an hourly wage and provided for permanent employment, which both suggest Ms. Kennedy was an employee.” The court also considered Ms. Kennedy’s testimony that she didn’t fully understand the implications of being classified as an independent contractor, especially the difference between a 1099 and W-2 tax form, and that she was told she was eligible for overtime. The court concluded that it was difficult to conclude that she knowingly entered an independent contractor relationship.
The court then addressed the remaining Steinke factors. The court found that Eckington did exercise a “substantial degree of control” over Ms. Kennedy’s work, assigning her specific times and locations and expecting her to notify the company if she couldn’t fulfill her duties. The court also noted that Ms. Kennedy was paid a fixed hourly wage, with no opportunity for profit or loss based on her managerial skills.
Furthermore, the court highlighted that Ms. Kennedy did not provide her own equipment, that she received training from Eckington, and that the work she performed was the “very service” Eckington offered, making it an integral part of their business.
Eckington’s Arguments Rejected
Eckington also argued that Ms. Kennedy’s services fell under an exception to the overtime wage requirements because she provided “professional” services. However, the court rejected this argument because Eckington did not raise it during the administrative proceedings. The court stated that all claims must be raised at the agency level first to allow for appropriate development and administrative response before judicial review.
The Outcome: Overtime Wages Affirmed
Ultimately, the District of Columbia Court of Appeals affirmed the OAH’s decision. The court concluded that the ALJ’s findings were supported by substantial evidence and that the ALJ appropriately applied the law. The court’s decision reaffirms that Ms. Kennedy was an employee under the DCMWA and is entitled to the unpaid overtime wages and liquidated damages.