Eleventh Circuit Independent Contractor or Employee Dispute

The Eleventh Circuit’s recent decision in Galarza v. One Call Claims, LLC offers a good examination of how courts distinguish an independent contractor from an employee under the Fair Labor Standards Act. The court framed its analysis around the economic nature of the parties’ relationship rather than contractual terminology. 

The Littler firm writes that the opinion concerns three insurance adjusters who challenged their classification after performing full-time claims work for the Texas Windstorm Insurance Association (TWIA) through a contractual arrangement with One Call Claims.

According to the record, the adjusters worked exclusively for TWIA for approximately two years, could not serve other carriers without ending their contracts, and had no influence over pay rates or schedules.

Although they supplied personal phones and vehicles and maintained professional licenses, TWIA directed their day-to-day handling of claims, including during periods of remote work. Applying the six-factor Scantland framework, the Eleventh Circuit examined control, opportunity for profit or loss, investment, skill, permanence, and integration.

The court observed that every factor except special skills tended to favor employee status over independent contractor status. The companies exercised pervasive oversight, limited the adjusters’ ability to manage earnings, and relied on their work as an integral component of claims operations.

Given these circumstances, the court concluded that a reasonable jury could deem the workers economically dependent and therefore potentially employees.

This case serves as a caution to entities that rely on nontraditional staffing structures. Courts assess working relationships by examining economic dependence and overall substance rather than formal agreements or isolated indicators of autonomy.

Legal teams should periodically evaluate classification practices, particularly when workers perform core operational tasks under substantial direction. Pay particular attention to contractual and functional arrangements. A misstep may expose companies to considerable exposure under the FLSA.