McLaughlin v. DialAmerica Marketing, Inc.

716 F. Supp. 812, 29 Wage & Hour Cas. (BNA) 645, 1989 U.S. Dist. LEXIS 2985, 1989 WL 76046
CourtDistrict Court, D. New Jersey
DecidedMarch 23, 1989
DocketCiv. A. 81-4020
StatusPublished
Cited by17 cases

This text of 716 F. Supp. 812 (McLaughlin v. DialAmerica Marketing, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McLaughlin v. DialAmerica Marketing, Inc., 716 F. Supp. 812, 29 Wage & Hour Cas. (BNA) 645, 1989 U.S. Dist. LEXIS 2985, 1989 WL 76046 (D.N.J. 1989).

Opinion

WOLIN, District Judge.

Currently pending before the Court is an action commenced by the Secretary of the United States Department of Labor (“Secretary”) alleging that defendant DialAmeri-ca Marketing, Inc. (“DialAmerica”) violated the minimum wage and recordkeeping provisions of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq. (“FLSA”) in connection with its home telephone search program. Because of pronounced violations of the FLSA and a failure to pay a minimum wage to the participants in such program, the Court will order the payment of back wages and restrain DialAmerica from further withholding of minimum wages.

I. BACKGROUND

DialAmerica Marketing, Inc. is a Delaware corporation with offices in 20 states, including New Jersey, that employs over 2,400 people nationwide. For purposes of this action, DialAmerica concedes it is an enterprise within the meaning of Section 3(r) of the FLSA. Further, it agrees that it has gross volume of sales made or business done of not less than $250,000.00 and employees who are engaged in interstate commerce. Its business is telephone marketing of which a major part is the sale of magazine renewal subscriptions, its “expire” program. In order to sell these subscriptions, DialAmerica receives from publishers the name and address of subscribers whose subscriptions have or are about to expire. DialAmerica prints cards with the name and address of each subscriber ("expire cards”), has its employees attempt to locate a telephone number for each card, and then forwards the subscriber information to its sales offices throughout the country where telephone salespersons contact the subscribers in an attempt to sell magazines.

Initially, DialAmerica employed in-house researchers at its Teaneck, New Jersey location to obtain subscribers’ telephone numbers from telephone books and from directory assistance. In 1976, DialAmerica expanded its telephone number search capacity by instituting a home researcher program. DialAmerica initially recruited home researchers through five advertisements in a local shopper newspaper, but after May 1979, all prospective home researchers, upon hearing about the program from friends or family members, sought out DialAmerica for the opportunity to do home research. These people made an appointment to speak to someone in DialAm-erica’s lead processing department. At that time they were taught how to fill out a magazine expire card, and those who desired the homework signed an independent contractor agreement. DialAmerica never rejected anyone who wanted to be a home researcher. Between 1980 and mid-1982, DialAmerica employed hundreds of home researchers.

The modus operandi employed by Dia-LAmerica required that a home researcher travel to DialAmerica’s Teaneck office. At that time he or she would be given a box of 500 cards to research and would make an appointment, generally for one week later, to return the cards and pick up new ones. If the researcher desired more time, he or she could reschedule the appointment. A home researcher could ask for as many cards as he or she wanted to research subject to a 500-card minimum and card availability. Experienced researchers would pick up as many as 3,000-4,000 cards per week. Researchers were restricted to the extent that they could not pick up a new group of cards to research until they had completed the group previously taken. The cards, when given to a home researcher, were presorted by state and area code, and home researchers were permitted to *814 request cards containing addresses from states of their choice.

These home workers then brought the cards home and attempted to obtain telephone numbers for the subscribers designated on each card. Numbers found were written on the card and the card became completed and compensable. The home researcher was unrestrained in the time he or she wanted to expend to complete the cards, since DialAmerica did not require a minimum or maximum number of hours. Nor was there an obligation to complete the cards that were taken. Some home researchers chose to spread the work over a full week regardless of the number of cards to research; some necessarily worked a full week because of the large number of cards; and some completed the work in two or three days. Each home researcher tailored his or her home research to fit his or her individual needs and life styles.

The home researchers were paid on a piece rate basis — initially five cents, later seven and then ten cents — for each subscriber telephone number found. Occasionally, the piece rate was higher for groups of cards which involved subscribers for whom numbers were difficult to locate {e.g., children) and where the success rates were particularly low. By contrast, in-house researchers were paid the FLSA minimum wage for all hours worked. Dia-lAmerica also required the home researchers, unlike the in-house researchers, to fill out independent contractor or subcontractor applications and to sign independent contractor agreements.

In addition to the home researchers who picked up their cards directly from DialAm-erica’s Teaneck office, six or seven home researchers (“distributors”) also distributed cards to other home researchers (“dis-tributees”) who could or would not travel to the Teaneck office. The distributors received one cent above the piece rate for each number found by their distributees. They received one check for the gross amount of all listed numbers found by them and by the distributees to whom they gave cards. Some of the distributors paid their distributees the full piece rate and kept the one cent; others paid less than the piece rate to their distributees. Originally, DialAmerica required the distributors to obtain signed independent contractor’s agreements from their distributees. Copies of these agreements were initially retained by DialAmerica. Later in the program, when it ceased to require distribu-tees to sign such agreements, the existing agreements were discarded. These distributors were not subject to any supervision from DialAmerica in running their distributor operations. DialAmerica had no contact with the distributees and does not possess records of the names of the distribu-tees.

For each of the home researchers (other than for distributees), DialAmerica maintained detailed records listing for each week the number of cards the home researcher received, the applicable piece rate, the number of cards for which listed telephone numbers were found and the total amount paid for that week. Because Dia-lAmerica erroneously believed that the home researchers were not “employees” and were properly paid at a piece rate, DialAmerica did not keep any records of the number of hours the home researchers worked or the number of cards any of them could research in an hour (i.e., their respective production rates). Nor did DialAmeri-ca require the home researchers to maintain a handbook recording the number of hours they worked. Thus, no home researcher kept any record of the rate per hour at which he or she could research cards.

In June 1982, during the pendency of this lawsuit, DialAmerica ceased the home research program and terminated the employment of all of the home researchers except for a few who commenced working at defendant’s Teaneck office.

II. PROCEDURAL HISTORY

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716 F. Supp. 812, 29 Wage & Hour Cas. (BNA) 645, 1989 U.S. Dist. LEXIS 2985, 1989 WL 76046, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mclaughlin-v-dialamerica-marketing-inc-njd-1989.