In Bartels v. Birmingham, 332 U.S. 126, 67 S. Ct. 1547 (1947), the Supreme Court held that members of musical bands were employees of the bands’ leaders, rather than of the operators of the dance halls where the bands played, within the meaning of the Social Security Act. The Court emphasized that, inter alia, the band leader organized and trained the band, that the leader’s musical skill determined the success or failure of the band, and the relationship between the leader and the band members was permanent. The case is important because, inter alia, it applied an “economic reality” test, using the reasoning in United States v. Silk, 331 U.S. 704 (1947), for determining the existence of an employment relationship. This test for determining whether a worker is an employee or an independent contractor, and which entities are employers, came to be applied in cases under the Fair Labor Standards Act. See Schultz v. Cap. Int’l Sec., Inc., 466 F.3d 298, 304–05 (4th Cir. 2006).
Statutory and Regulatory Background
The FLSA requires covered employers to pay minimum wages and overtime compensation to certain categories of employees. 29 U.S.C §§ 206-207. The FLSA also imposes recordkeeping requirements on employers. 29 U.S.C. § 211. These requirements raise questions about what it means to be an “employer” or an “employee,” and, more specifically, about the nature of the employment relationship that falls within the scope of the FLSA’s minimum wage and overtime requirements.
The FLSA itself defines these terms broadly, but without great clarity. Section 203 of the FLSA defines “employer” to include “any person acting directly or indirectly in the interest of an employer in relation to an employee[.]” 29 U.S.C. § 203(d). The FLSA defines the term “employee” to generally mean “any individual employed by an employer.” 29 U.S.C. § 203(e). And it defines “employ” as “includes to suffer or permit to work.” 29 U.S.C. § 203(g).
While Bartels and Silk involved cases brought under a different law, the Social Security Act, the “economic realities” test they articulated for determining whether a worker is an employee or an independent contractor came to be applied in FLSA cases. See Schultz v. Cap. Int’l Sec., Inc., 466 F.3d 298, 304–05 (4th Cir. 2006).
Facts
Bartels examined relationships between the operators of dance halls, the leaders of bands that played in these dance halls for “limited engagements”, and the musicians in those bands.
In a nutshell, the band leaders contracted with various ballroom operators to play at their establishments for a contract price. 332 U.S. 126, 127. Most of the engagements at issue were one-night performances, although some were for performances over several successive nights. 332 U.S. at 127–28.
As a practical matter, the Court observed that the “leader exercise[d] complete control over the orchestra.” 332 U.S. at 128. The leader set the musicians’ salaries, paid them, and told them what and how to play. Id. He provided the sheet music and arrangements, the public address system, and the musicians’ uniforms. Id. He hired and fired the musicians. The band leader paid for expenses, including agents’ commissions, transportation and other expenses out of the payments received from the dance hall operators. Id. Any extra money left over after the expenditures was “his profit and any deficit his personal loss.” Id. The operators of the dance halls provided the piano but not the other instruments. Id.
The relationship between the parties was complicated, however, by the contracts between the dance hall operators and the union that band leaders and musicians belonged to. 332 U.S. at 128. The Court observed that the form contract stated “that the ballroom operator is the employer of the musicians and their leader, and ‘shall have complete control of the services which the employees will render under the specifications of this contract.’” Id.
The Circuit Court of Appeals had placed great weight on the terms of the contract. It applied the “common law test of control, i.e., that one was an employer if he had the ‘right’ to direct workers in what should be done and how it should be done.” Id. at 129. It concluded that the contract between the parties gave the ballroom operators the “‘right’ to control the musicians and the leader, whether or not the control was actually exercised.” Id. The Circuit Court of Appeals determined that while the contract was not binding on the government, it was binding on the parties, and therefore the leader and musicians were employees of the dance hall operators under the SSA if taxing authorities accepted the arrangement as valid. Id.
The question for the Supreme Court in Bartels was whether the facts showed that the musicians were “employees” of the band leader, or of the ballroom operators, within the meaning of the Social Security Act.
The Court’s Decision
The Bartels Court reversed. It held that the musicians were “employees” of the band leader within the meaning of the SSA.
The Court observed that under Silk, the employment relationship was to be determined a multi-factor test that examined the “economic reality” of the situation:
In United States v. Silk … we held that the relationship of employer-employee, which determines the liability for employment taxes under the Social Security Act was not to be determined solely by the idea of control which an alleged employer may or could exercise over the details of the service rendered to his business by the worker or workers. Obviously control is characteristically associated with the employer-employee relationship but 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. In Silk, we pointed out that permanency of the relation, the skill required, the investment if the facilities for work and opportunities for profit or loss from the activities were also factors that should enter into judicial determination as to the coverage of the Social Security Act. It is the total s[it]uation that controls.…
Applying these “economic reality” factors to the facts in Bartels, the Court concluded that the musicians were employees of the band leader, not the dance hall operator:
We are of the opinion that the elements of employment mark the band leader as the employer in these cases. The leader organizes and trains the band. He selects the members. It is his musical skill and showmanship that determines the success or failure of the organization. The relations between him and the other members are permanent; those between the band and the operator are transient. Maintenance costs are a charge against the price received for the performance. He bears the loss or gains the profit after payment of the members’ wages and the other band expenses.
332 U.S. at 132. Thus, the Court reasoned that the totality of the circumstances indicated an employer-employee relationship between the band leader and the musicians. The Court accordingly held that under this analysis — applying the economic reality test described in Silk — the musicians were “employees” of the band leader within the meaning of the SSA.
Analysis
In sum, Bartels held that members of a musical band were employees of the band’s leader, rather than of the operators of the ballrooms where the band played, within the meaning of the Social Security Act. The case is important because, inter alia, it applied an “economic realities” test, using the reasoning in Silk, 331 U.S. 704 (1947), for determining the existence of an employment relationship. This test for determining whether a worker is an employee or an independent contractor, and which entities are employers, came to be applied in cases under the Fair Labor Standards Act. See Schultz, 466 F.3d 298, 304–05 (4th Cir. 2006).
This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to [email protected].