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September 30, 1992

WILLIAM ALBRECHT, Individually, both as co-partners t/a ANN BRITE FASHIONS, Defendants.

The opinion of the court was delivered by: GLENN E. MENCER


 The Secretary of Labor (hereinafter "the Secretary") initiated this suit in May, 1991, charging defendants with violations of the Fair Labor standards Act of 1938 as amended, 29 U.S.C. § 201 et seq., (hereinafter referred to as "the Act" or "FLSA"). This court has jurisdiction to hear the case pursuant to Section 17 of the Act, 29 U.S.C. 217, and 28 U.S.C. §§ 1331 and 1345. The Secretary avers that William and Shirley Ann Albrecht have been and are Co-Partners trading as Ann Brite Fashions. Plaintiff asserts that the Albrechts willfully violated the provisions of the Act by paying wages at rates less than the statutory minimum rate prescribed in Sections 6 and 3(b) of the Act. The Secretary also avers that the defendants failed to compensate workers for overtime in the amount of one and one-half times their regular rate. In addition, the Secretary believes that the Albrecht's failed to keep accurate records as required by 29 C.F.R. 516. The Secretary is asking the court to enjoin the defendants from violating the applicable provisions of the Act and to award backwages as well as liquidated damages.

 In the motion for partial summary judgment, the Secretary initially avers that the employees are covered under the Fair Labor standards Act ("FLSA"). The FLSA requires the employers of employees who work directly on goods that are sold in interstate commerce to pay the minimum wage as well as overtime. Also the Secretary asserts that an employer may not deduct for expenses required by the employer if such deductions bring the employee's pay below the minimum wage. Plaintiff asserts that the piece rate paid to the employees for the sewing work that they performed at home, when compared to the hours that these people worked at home, did not yield the minimum wage for all hours worked. The Secretary also believes that the defendants required employees to purchase equipment to perform the sewing work, and that the purchase price of the equipment brought the worker's wages below the minimum wage. As a result, the Secretary believes that the workers are entitled to recover minimum wage and overtime backwages.

 This court stayed the proceedings in an order dated June 22, 1992, allowing defendant Shirley Ann Albrect until July 22, 1992 to find substitute counsel of her own selection. As of this point in time, Shirley Ann Albrecht has failed to respond to the plaintiff's motion for summary judgment.

 Defendant William Albrecht rests his argument upon one assertion, namely that the seamstresses are independent contractors, and therefore are not entitled to the protections available under the FLSA. There is no single test to determine whether a person is an employee or an independent contractor for purposes of the FLSA. The Act defines an employee as "any individual employed by an employer," 29 U.S.C. § 203(e)(1) (1988), and an employer as "any person acting directly or indirectly in the interest of an employer in relation to an employee . . ." Id. § 203(d). In accordance with these expansive definitions, the Supreme Court has emphasized that the courts should look to the economic realities of the relationship in determining employee status under the FLSA. Rutherford Food Corp. v. McComb, 331 U.S. 722, 730, 67 S. Ct. 1473, 1477, 91 L. Ed. 1772 (1947), Martin V. Selker Bros. Inc., 949 F.2d 1286, 1293 (3d Cir. 1991).

 It is a well-established principle that the determination of the employment relationship does not depend on isolated factors, but rather upon the "circumstances of the whole activity." Martin, supra at 1293. The court has held that there are six factors to determine whether a worker is an "employee":

 1) the degree of the alleged employer's right to control the manner in which the work is to be performed; 2) the alleged employee's opportunity for profit or loss depending upon his managerial skill; 3) the alleged employee's investment in equipment or materials required for his task, or his employment of helpers; 4) whether the service rendered requires a special skill; 5) the degree of permanence of the working relationship; 6) whether the service rendered is an integral part of the alleged employer's business. Selker Bros, supra at 1293.

 Not only should courts examine the "circumstances of the whole activity," they should "consider whether, as a matter of economic reality, the individuals are dependent upon the business to which they render service." Donovan v. DialAmerica Marketing, Inc., 757 F.2d 1376, 1382 (3d Cir. 1985).

 This test was applied to seamstresses who worked at home and set their own working hours in the case of Silent Woman, Ltd. v. Donovan, 585 F. Supp. 447 (E.D. Wis. 1984). That case held that seamstresses are indeed covered under the FLSA, and the reasoning in that case appears persuasive to this court. Of particular note was the fact that throughout the contract, drawn up by Silent Woman, Ltd., the seamstresses are referred to as "independent contractors." The court was not persuaded by that language, however, finding that "In the application of social legislation, employees are those who as a matter of economic reality are dependent upon the business to which they render service." Silent Woman, supra, quoting Bartels v. Birmingham, 332 U.S. 126, 130, 67 S. Ct. 1547, 1549, 91 L. Ed. 1947 (1947).

 In Silent Woman, the company argued as the Albrechts do presently, that the seamstresses were independent contractors because the company exercised no control over the manner in which they performed their work. The court looked at the history of the FLSA, determining that Congress intended the FLSA to apply to employees working at home. The company next argued, as do the Albrechts, that the relationship is not permanent in nature, as either party may terminate the relationship, and the women are permitted to perform work for others. The court found that "the parties regard their relationship as a permanent one, work done for outside does not undermine the permanency of the Silent Woman work." Id. at 451. The court suggested that "While the five-part U.S. v. Silk test strongly suggests that the seamstresses are employees rather than independent contractors, a common sense examination of the total situation removes any unresolved doubt." Id.

 Under this totality of the situation approach, the court found the seamstresses had a lack of bargaining power vis-a-vis the company. Rather than treat its seamstresses as independent agents, silent Woman offered all the same terms, a piece rate designed to yield the minimum wage. It is a "take it or leave it" proposition. Id. The Silent Woman court then points to other cases that have come to similar conclusions. In Walling v. American Needlecrafts, 139 F.2d 60 (6th Cir. 1943), and Mitchell v. Nutter, 161 F. Supp. 779 (N.D. Me. 1958), both courts found that women doing needlework in their spare time at home were employees under the FLSA. See also Goldberg V. Whitaker House Cooperative, 366 U.S. 28, 81 S. Ct. 933 (1961) (home part-time needleworkers held employees of their cooperative under the FLSA), and Walling v. Twyeffort, 158 F.2d 944 (2nd Cir. 1947), (tailors with shops at home held to be employees under the FLSA). This court is in agreement with these cases, and believes that the seamstresses in the present case are employees for purposes of the FLSA.

 Having held that the seamstresses are employees, the evidence is uncontroverted that the defendants have violated the minimum wage and overtime provisions of the Act. The court must then determine whether the defendants are liable for two years or three years of backwages. An employer is only liable for two years of backwages if the violations are not willful, but for three years of backwages if the violations are willful. The Supreme court set forth the standard which determines whether violations of the FLSA are willful in Mclaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S. Ct. 1677, 100 L. Ed. 2d 115 (1968). There the court held that an employer "willfully" violated the Act when it "knew or showed reckless disregard for the matter of whether its conduct was prohibited" by the Fair Lair standards Act. at 133, 108 Sect. at 1681. Using the standard enunciated in Trans World Airlines, Inc. v. Thurston, 469 U.S. Ill, 105 S. Ct. 613 (1985), the Court defined a "willful" employer for liquidated damages purposes as one who shows a disregard for the governing statute and an indifference to its requirements." Id. at 127, 105 S. Ct. at 625, Martin v. Selker Bros, Inc., 949 F.2d 1286, 1296 (3d Cir. 1991). In determining whether a violation is willful, the employer's state of mind regarding intent and his belief regarding the propriety of his actions must be examined. EEOC v. City of Lebanon, Pa., 842 F.2d 1480, 1487 (3d Cir. 1988).

 The Secretary argues that defendant Shirley Ann Albrecht knew her conduct violated the Act as the Secretary had previously filed a complaint against her for identical violations. As Justice Stevens stated in writing for the Richland Shoe court:

 In common usage the word "willful" is considered synonymous with such words as "voluntary," "deliberate," and "intentional." See Roget's International Thesaurus, § 622.7, p. 479 (4th ed. 1977). The word "willful" is widely used in the law, and, although it has not by any means been given a perfectly consistent interpretation, it is generally understood to refer to conduct that is not merely negligent. The standard of willfulness that was adapted in Thurston- that the employer either knew or showed reckless disregard for the matter of ...

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