Olukayode v. UnitedHealth Group

Background

Oluro Olukayode performed “at-the-elbow” support during electronic-medical-record software implementations at hospitals. The defendants classified him and other consultants as independent contractors and paid them hourly. Olukayode alleged that he and other consultants worked more than 40 hours per week without receiving overtime pay.

The lawsuit asserted overtime and employment-classification claims under the Fair Labor Standards Act, Maine law, New York law, and Maryland law. The court had previously conditionally certified a Fair Labor Standards Act collective action covering people who had signed contracts to provide at-the-elbow services as independent contractors before September 15, 2018. The potential collective included 145 people.

The record showed substantial differences among consultants and projects. Consultants received different amounts of training and supervision, had different timekeeping and meeting requirements, worked different numbers of weeks and hours, had differing opportunities to negotiate their pay, and sometimes worked for competitors or supplied their own equipment.

Fair Labor Standards Act Collective Action

After discovery, the defendants asked the court to decertify the collective action. At this stage, the court applied a stricter test for deciding whether the plaintiffs were sufficiently similarly situated. The court focused on differences in the consultants’ factual and employment settings, the individualized defenses available to the defendants, whether the defendants had a common unlawful policy, and fairness and case-management concerns.

The court granted the motion to decertify. It held that the differences among consultants affected several parts of the economic-reality test used to distinguish employees from independent contractors, including control, opportunity for profit or loss, permanence of the relationship, and investment in equipment. Resolving the claims would require individualized evidence and “mini-trials” about each consultant’s status. The court also rejected Olukayode’s argument that the defendants’ general practice of classifying consultants as independent contractors created a sufficiently common policy, because the defendants reviewed classifications individually.

Summary Judgment

The defendants moved for summary judgment, which asks whether the evidence leaves any legally important factual dispute requiring a trial. The defendants argued that Olukayode’s Fair Labor Standards Act claim was too late and that he was an independent contractor under all applicable laws.

The court held that the defendants did not willfully violate the Fair Labor Standards Act. It relied on evidence that the defendants repeatedly reviewed consultant classifications with in-house and outside lawyers, reviewed each consultant’s status, and had not previously been sued for misclassification. Because the violation was not willful, the two-year limitations period applied rather than the three-year period. Olukayode filed suit just over two years after his last work for the defendants, so the court dismissed his Fair Labor Standards Act claim as time-barred.

The court did not grant summary judgment on the state-law classification claims. Under Maryland law, the court found genuine disputes about several factors, including the defendants’ control over Olukayode’s work, his opportunity for profit or loss, the permanence of the relationship, and whether his work required a special skill. Three factors favored employee status and three were inconclusive. The court likewise found factual disputes under New York and Maine law, particularly concerning control over the work. Therefore, the court could not decide as a matter of law that Olukayode was an independent contractor under those state laws.

Rule 23 Class Certification

Olukayode also sought certification of separate Maine, New York, and Maryland classes under Federal Rule of Civil Procedure 23. The court denied certification because the proposed classes did not satisfy the requirement that common issues predominate over individual ones.

The court again relied on differences in training, supervision, timekeeping, meetings, reporting, work for competitors, pay negotiations, project lengths, hours, and equipment. These individual questions would require varying evidence for each consultant and would overwhelm the common questions. The court therefore concluded that the proposed class actions could not proceed efficiently.

Disposition

The court ordered that:

- the defendants’ motion to decertify the Fair Labor Standards Act collective action was granted; - the collective action was decertified; - all opt-in plaintiffs were dismissed without prejudice; - the defendants’ motion for summary judgment was granted in part; - Olukayode’s Fair Labor Standards Act claim was dismissed; and - Olukayode’s motion for Rule 23 class certification was denied.