O'Dell v. QualScript LLC

1

JANA O'DELL, Individually and on Behalf of All Others Similarly Situated PLAINTIFF v. QUALSCRIPT, LLC, GAYLE FAGGETTI, and PAT MCCARVER DEFENDANTS

No. 4:21-CV-00260-LPR

United States District Court, E.D. Arkansas, Central Division

March 28, 2023

ORDER

LEE P RUDOFSSKY UNITED STATES DISTRICT JUDGE.

This is a wages case. Plaintiff Jana O'Dell is suing QualScript LLC and its two co-owners, Gayle Faggetti and Pat McCarver. Ms. O'Dell alleges that Defendants misclassified her as an independent contractor and thus erroneously exempted her from the minimum wage and overtime protections of the Fair Labor Standards Act and the Arkansas Minimum Wage Act. Ms O'Dell seeks to recover unpaid wages, liquidated damages, prejudgment interest, costs, and attorneys' fees. Currently before the Court is Defendants' Motion for Summary Judgment.^[1] For the following reasons, that Motion is GRANTED.

BACKGROUND

Located in Conway, Arkansas, QualScript is a limited liability company that provides medical transcription services to medical providers.^[2] QualScript has been in business since September 29, 2006, and is co-owned by Ms. Faggetti and Ms McCarver.^[3] Ms. Faggetti and Ms. McCarver are both managers in the company as well.^[4] Ms. O'Dell worked as a medical transcriptionist for Defendants from late 2013 until the end of 2021.^[5]

I. Ms. O'Dell's History in the Industry and Hiring at QualScript

Ms. O'Dell has decades of experience as a medical transcriptionist. She received a certificate to become a medical transcriptionist (and began working as one) in the mid-1980s.^[6] Ms. O'Dell first worked for a family physician, Doctor James R. Weber, off and on between 1984 and 1996.^[7] She filled multiple different roles for Doctor Weber, medical transcription being only one of the roles.^[8] She was paid on an hourly basis for her work.^[9]

From 1996 to 2012, Ms. O'Dell provided medical transcription services to Doctor Les Anderson.^[10] Ms. O'Dell was paid by the line for this work.^[11] She also had two other medical transcriptionists working for her as independent contractors; she paid them by the line.^[12] Ms. O'Dell testified that when Doctor Anderson was bought out by “St. Vincent,” Ms. O'Dell “shut [her own] business down.”^[13] She then had a brief stint as an independent contractor for RI Unlimited, a Minnesota-based medical transcription company.^[14] She was paid by the line for this work.^[15]

In April of 2012, Ms. O'Dell sent a resume to QualScript.^[16] As briefly noted above, QualScript is a medical transcription company.^[17] QualScript's business model is relatively straightforward. Medical professionals enter into agreements with QualScript wherein the medical professional pays QualScript to ensure that the medical professional's medical reports are accurately transcribed and edited.^[18] QualScript provides the transcriptionists to handle the transcribing and editing.^[19] A rational juror could infer that QualScript's profit is derived from the difference between how much it receives from the medical professionals and how much it pays the transcriptionists to do the work.^[20]

When applying to QualScript, Ms. O'Dell indicated “that she had been in the medical transcription business for thirty years,” and “that she specialized in certain medical fields (including radiology) ”^[21] QualScript was silent on Ms. O'Dell's April 2012 application until 2013, when QualScript got a new client, Radiology Associates, P.A. (RAPA).^[22] “RAPA utilizes CT scans, MRIs, ultrasound and other imaging technologies in its practice.”^[23] RAPA hired QualScript to “ensure[] that a sufficient number of medical transcriptionists/editors are in the ‘pool' to handle the workload ”^[24] To meet the demands of this new client, QualScript began searching for “medical transcriptionists with prior experience or who attended an accredited medical transcription school.”^[25] It was at that point that QualScript called Ms. O'Dell and asked her to come in for an interview.^[26] Ultimately, Ms. O'Dell began working with QualScript in very late July or early August of 2013.^[27]

II. The Independent Contractor Agreements Between Ms. O'Dell and QualScript

On July 31, 2013, Ms. O'Dell and QualScript signed two separate “Independent Contractor Agreement[s].”^[28] One agreement applied to work she would perform for QualScript's new client, RAPA, while the other applied to work she would perform for QualScript's non-RAPA clients.^[29]The Court will call one agreement the RAPA Agreement and the other agreement the non-RAPA Agreement.

The Agreements were largely composed of identical, generally applicable provisions. But there were a few notable differences that corresponded to differences in the specific work Ms. O'Dell would perform for RAPA versus the work she would perform for QualScript's non-RAPA clients. Below, the Court will provide a detailed overview of the provisions of these Agreements and how they operated in practice. But the full language of these Agreements is important to the resolution of the pending Motion, so the Court has also appended the full Agreements to this Order.

A. Similarities Between the Agreements

The Agreements (each titled “Independent Contractor Agreement” in large, bold-face, allcaps print at the top) were principally composed of two opening “whereas” statements followed by a list of enumerated “promises and covenants.”^[30] One of the opening “whereas” statements in both Agreements declared that the “Independent Contractor desires to be self-reliant and free to provide transcription services to other parties and not to be considered an employee of QualScript.”^[31] Then, in the enumerated paragraphs, both Agreements were clear that Ms. O'Dell's status “shall be that of an independent contractor, and not that of an agent or employee.”^[32] Both Agreements were terminable by either party at will.^[33] Both Agreements stated that Ms. O'Dell was not eligible for workers' compensation.^[34] Both Agreements stated that Ms. O'Dell needed to indemnify QualScript “from and against any and all loss, damage, cost, or expense, including attorney's fees, by reason of the Contractor's performance of her services for QualScript.”^[35] And both Agreements stated that QualScript was not responsible for Ms. O'Dell's expenses (unless otherwise agreed to in writing).^[36] The non-RAPA Agreement stated that Ms. O'Dell “shall supply, at her sole expense, all equipment, tools, materials and/or supplies to accomplish the work to be performed.”^[37] In practice, this provision applied to both her RAPA and non-RAPA work because she used the same setup for both; Ms. O'Dell worked remotely from her home and furnished her own computer, high-speed internet, and medical books.^[38] QualScript provided Ms. O'Dell with three software programs- Nuance PowerScribe 360 for use on RAPA work, Fluency for non-RAPA work, and ShareFile for accessing calendars and schedules.^[39] While QualScript provided Ms. O'Dell access to PowerScribe, RAPA handled the costs associated with that access and provided IT support.^[40] As for Fluency, the non-RAPA Agreement provided that Ms. O'Dell had to pay $10.00 semi-monthly to access the Fluency software.^[41] But at least as of July 17, 2018, QualScript had waived that fee for Ms. O'Dell.^[42] QualScript also provided a second monitor, headphones, and a foot pedal.^[43]QualScript “charged [her] $10.00 a month for at least a year for [the] foot pedal.”^[44]

Both Agreements further provided that Ms. O'Dell was not an employee for purposes of taxes. Specifically, the Agreements stated that “[n]either Federal, nor state, nor local income tax, nor any other payroll tax of any kind, shall be withheld or paid by QualScript on behalf of the Contractor or her employees,” and that the “Contractor understands that she is responsible to pay her income tax in accordance with Federal, state, and local law.”^[45] Consistent with these portions of the Agreements, Ms. O'Dell signed a W-9 in which she indicated that she was an “Individual/sole proprietor” and that she was “not subject to backup withholding ....”^[46] Also consistent with her tax status as an independent contractor, QualScript issued Ms. O'Dell a Form 1099 each year.^[47]

Because of her classification, Ms. O'Dell was able to file a Schedule C with her taxes, claiming thousands of dollars of business expenses each year.^[48] For example, in 2018, she filed a Schedule C with her taxes, titled “Profit or Loss From Business (Sole Proprietorship).”^[49] She stated her principal business or profession was “Transcription,” and that her business name was “Jana O'Dell.”^[50] She deducted supplies, office expenses, telephone expenses, internet expenses, postage, outside services, small equipment, legal and professional services, and car and truck expenses.^[51] She made similar deductions on her 2019 and 2020 Schedule C Forms.^[52] Both Agreements were also clear that Ms. O'Dell was not entitled to any of QualScript's benefit plans:

Because Contractor is engaged in her own independent contract business, she is not eligible for, nor entitled to, and shall not participate in, any of QualScript's pension, health or other fringe benefit plans, if any such plans exist. Such participation in these fringe benefit plans is limited solely to . . . QualScript's employees.^[53]

While Ms. O'Dell's classification made her ineligible for benefits from QualScript, she was able to apply for and receive “Pandemic Unemployment for Independent Contractors” during Covid.^[54]

B. Differences Between the Agreements

Despite these significant similarities between the Agreements, the Agreements weren't completely in alignment on all key terms. The details of the work Ms. O'Dell performed under each Agreement were...