News & Articles

PPP Loan App Listing of Employees Not Relevant to FLSA

12 / 06 / 2020

Taylor v. HD & Assoc., LLC, 2020 U.S. Dist. LEXIS 213478 (E.D. La. 11/16/20)

Here, the company treated its cable technician workers as independent contractors.  Yet, when it made its PPP loan application, it allegedly treated them as employees.  These cable technician workers filed suit, claiming that they were owed unpaid wages and overtime under the Fair Labor and Standards Act (FLSA), as misclassified workers (i.e., that they were not, in fact, independent contractors for purposes of the FLSA).

Practitioners and litigants involved with disgruntled workers bringing forth claims for unpaid wages and overtime under the Fair Labor and Standards may wonder if discovery can be pursued to unearth damaging admissions against interest in PPP loan applications identifying employees.  Perhaps not, says a federal court in Louisiana.  

Recall that under the Interim Final Rules issued early on in the PPP loan program, companies could apply and identify employees for whom the company paid salaries and payroll taxes and independent contractors, reported on Form 1099-MISC.  Would it not then be relevant to the proper classification of workers under the FLSA IF the purported employer treated workers it claims are not employees as employees under the PPP loan program applications?

As the Federal court in this case viewed it, the PPP is a different statutory scheme than the FLSA.  Accordingly, the Federal court in Taylor did not view PPP loan information as relevant to the current litigation.  

This case highlights the ofter misunderstood classification of workers dilemma.  Workers might find that they are properly treated as employees under one Federal act but not another, or that the information they seek to use in proving employment might not be applicable if the body of law governing that treatment of the worker is vested in some other standard (i.e., the Federal common law, as opposed to the economic realities test under the FLSA, or the ABC tests that use presumption of employee status).

If you have any questions about worker classification standards, or a SS-8 determination has been made, please consider contacting Mr. Tufts, at 407-647-7887, for a review of your worker classification issues.