Fifth Circuit Affirms Trial Court Decision: Directional Driller Is "Contractor," Barring Overtime Action

• Published date: 16 June 2022
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Energy and Natural Resources, Contract of Employment, Employee Benefits & Compensation, Employment Litigation/ Tribunals, Oil, Gas & Electricity, Trials & Appeals & Compensation
• Law Firm: Kane Russell Coleman Logan
• Author: Ms Andrea Johnson

Affirmed. The Fifth Circuit just issued its opinion upholding the summary judgment decision of Judge Morales in the Corpus Christi Division of the Southern District of Texas. The Hargrave decision largely relies on Parrish v. Premier Directional Drilling, L.P., 917 F.3d 369 (5th Cir. 2019). See the previous blog.

As an extension of Parrish, the Hargrave case, with the Fifth Circuit's imprimatur, provides an obvious line of demarcation about contract workers like Hargrave, who offer directional drilling services in the oil patch, through companies like AIM. Thus, as a follow-up decision to Parrish, so to speak, Hargrave makes clear that Parrish was not a "fluke" or a "one-off"; instead, Parrish and now Hargrave mean something'directional drillers like Hargrave are "contractors" when hired by energy service companies like AIM, for project-by-project work. Ultimately, this finding means that Hargrave and others like him are not subject to the overtime requirements of the Fair Labor Standards Act. The result is that Hargrave further illuminates an area that is often fraught with questions'the classification (or misclassification, as the case may be) of employees versus contractors, and that bright line helps both companies operating in the energy field and the lawyers advising them.

The value of Hargrave should not be dismissed. While it follows Parrish, the Hargrave decision, in its "stick-to-it-ness," helps American industry generally, and particularly the energy industry, further define who a contractor is. It provides easy-to-follow guidance that employers often feel is missing when they try to understand the factors that may make a worker a contractor rather than an employee. That kind of clarity is not often achieved, but, when it appears, it is appreciated, and that's what Hargrave does.

In AIM's case, it sought Hargrave's contractor help through a third-party, "RigUp," through which Hargrave, in essence, pitched his skills and services to a variety of companies, such as AIM. The Fifth Circuit agreed with the district court, that Hargrave was "highly skilled," and, consequently, the appellate court also agreed that the Company did not control Hargrave's work and its results - he did. The fact that Hargrave had to follow the standard safety protocols that the oil patch dictates to everyone or that the Company assigned him to the projects that...