Labor & Employment Law Daily Wrap Up, EMPLOYEE STATUS—11th Cir.: Reasonable jury could conclude that claims adjusters hired to adjust hurricane damage were employees, (Oct 17, 2025)

By Ronald Miller, J.D.

The appeals court concluded that the Scantland factors suggested the adjusters were economically dependent on the companies, and a jury could reasonably conclude that they were employees.

A federal district court did not properly weigh the Scantland factors in ruling that claims adjusters hired to adjust hurricane damage were independent contractors, ruled the Eleventh Circuit. The adjusters sued for unpaid overtime wages that they claimed they were entitled to as “employees” under the FLSA. To distinguish between “employees” and independent contractors, the appeals court examined the relationship between the worker and alleged employer. In particular, the appeals court applied the “economic reality test” and assessed “the ‘economic reality’ of the relationship... and whether that relationship demonstrates dependence.” In this instance, the appeals court found that five of the six Scantland factors favored employee status (Galarza v. One Call Claims, LLC, No. 23-13205 (11th Cir. Oct. 16, 2025)).

Insurance claims. The Texas legislature created the Texas Windstorm Insurance Association (TWIA) to provide wind and hail insurance to the Texas coast. One Call Claims (OCC) is an outsourcing company for insurance claims that matches insurance companies with its own roster of licensed adjusters. The companies had a service agreement under which OCC would provide adjusters to investigate claims. In 2017, TWIA sought additional adjusters from OCC to help dispense claims after Hurricane Harvey. OCC assigned three adjusters to adjust insurance claims for TWIA. To work in this field, the adjusters had to be licensed, certified, and trained. Neither TWIA nor OCC trained the adjusters on the basic skills or functions of the job; instead, they were licensed by Texas and had previous experience in these roles.

Statutory obligations. But working for TWIA imposed additional requirements. As a creature of the Texas legislature, TWIA is subject to statutory obligations that do not bind ordinary insurers in the marketplace. Therefore, TWIA required the adjusters to complete a certification process to ensure that they were familiar with the additional requirements. According to one adjuster, TWIA “trained [him] on how it wanted [him] to perform [his] job functions” and “provided [him] with a spread-sheet ‘crash course’ as an aide to perform [his] job duties as TWIA required.”

While the companies state that the adjusters had the authority to settle claims, the adjusters insist that they “were required to consult with and get approval from TWIA before making settlement offers and resolving claims.”

Work parameters. The adjusters and OCC had a contract that generally defined the parameters of the engagement. The agreement described the adjusters as “independent contractor[s]” who were “temporarily engaged” in “separate and standalone” assignments. This particular assignment for TWIA was for an indefinite duration to be “determined by TWIA.”

The adjusters’ assignments lasted about one and a half to two years. Their contracts prohibited them from “[i]nduc[ing] or attempt[ing] to induce any customer, vendor, association, organization or other person or entity to cease doing business with OCC.” While adjusting claims for TWIA, the adjusters did not adjust claims for anyone else. The contract indicated that they would work “up to 10 hours per day with hours determined by [TWIA].” All adjusters “had to report any tardies/absences to OCC’s Human Resources Manager and to [their] TWIA direct manager,” otherwise “OCC had the discretion to deduct up to one day’s pay[.]” The adjusters also claimed that TWIA “controlled and directed [the workers’] day-to-day tasks.”

Expenses. During this time, the adjusters were generally responsible for the expenses they incurred. In particular, they were “responsible for all personal and professional expenses” including state adjusting license fees, business license fees, membership fees and dues, car and travel expenses, and insurance premiums. Because the adjusters were not from the area, these expenses included “food, lodging, and transportation when working on TWIA’s premises.” The adjusters claimed tax deductions for business expenses incurred in connection with the services they rendered.

However, TWIA provided all adjusters with equipment it required them to use for work. Specifically, it provided identification badges that the adjusters had to wear while on TWIA premises, work email addresses and signature blocks, computers, and telephones.

Remote work. After about six or seven months, TWIA underwent a shift to remote work. This shift to remote work introduced some new policies. In particular, the adjusters claim that TWIA “granted [them] remote access... to its computer network and applications” and required them to “install software on [their] computer[s] that allowed [TWIA] to monitor” their productivity. TWIA claimed that during remote work, the adjusters “provided their own workspaces and equipment, including computers and cell phones,” and that the workers were responsible for “Internet service, cell phone service, power, and other business expenses.” The adjusters also had different schedules after the shift.

For the adjusters’ services, OCC invoiced TWIA and paid the adjusters non-negotiable day rates ranging between $500 and $1200. By August 2019, all the adjusters completed their assignments and were no longer working for TWIA.

Overtime claim. Less than a year later, one of the adjusters brought this action seeking damages for unpaid overtime labor. Two other adjusters joined the action. Their complaint alleged that they were misclassified as independent contractors instead of employees and were not paid overtime for any week in which they worked more than 40 hours.

The adjusters and the companies filed cross motions for summary judgment. The district court then assessed the claims under the six factors outlined in Scantland v. Jeffrey Knight, Inc., 721 F.3d 1308, 1311—12 (11th Cir. 2013), to determine whether the workers were employees protected by the FLSA or independent contractors outside its scope. The district court granted the companies’ motion for summary judgment. The adjusters timely appealed.

Economic reality. On appeal, the Eleventh Circuit concluded that the district court did not properly weigh the Scantland factors. To determine whether a worker qualifies as an “employee” and is thus entitled to overtime wage protection under the FLSA, the appeals court assessed the economic reality of the relationship and whether the worker is economically dependent on the alleged employer under the totality of the circumstances. Here, the appeals court concluded that the factors suggested the adjusters were economically dependent on the companies, and a jury could reasonably conclude that the adjusters were employees.

To distinguish between “employees” and independent contractors, the appeals court examined the relationship between the worker and alleged employer. In particular, the appeals court applied the “economic reality test” and assessed “the ‘economic reality’ of the relationship... and whether that relationship demonstrates dependence.”

In this instance, the appeals court found that five of the Scantland factors favored employee status, and only one favored independent contractor status. So, on this record, a jury could reasonably conclude that the adjusters were employees.

Control. With respect to “the nature and degree of the alleged employer’s control as to the manner in which the work is to be performed,” the appeals court concluded that based on the requirements imposed by the companies, this factor suggested that they were employees. The alleged employer controlled how much the adjusters were paid, how many hours they worked, how many days they worked, their daily work schedule, and if they could work for others, in addition to whether the alleged employer closely monitored the quality of the work.

Opportunity for profit or loss. As to the second factor, the appeals court considered whether the adjusters can “earn additional income through their own initiative” by negotiating a rate, selling additional goods or services, or similar method. Because the adjusters could do nothing to influence wages, this factor indicated that they were likely employees.

Investment. Third, the appeals court assessed the adjusters’ “investment in equipment or materials required for [their] task[s], or [their] employment of workers.” Here, the adjusters had no ability to employ others, nor did they heavily invest in the equipment and materials necessary for the job compared to the companies. Thus, the companies’ and adjusters’ relative investments suggested that they were employees.

Special skill. Fourth, the appeals court asked whether the job required a “special skill.” It was undisputed that the adjusters came to the relationship with special training and a license from the state to work in this field. That the adjusters acquired these skills and licenses before their TWIA assignment supported the idea that they could be independent contractors. Thus, the court concluded that this factor weighed in favor of classifying the adjusters as independent contractors.

Permanency and duration of the working relationship. Fifth, the appeals court determined “the degree of permanency and duration of the working relationship.” Here, the companies retained the adjusters for an indefinite and extendable period of time during which they did not service any other companies, supporting employee status. Specifically, the adjusters serviced the companies for about two years, could have extended the relationship, and did not work for anyone else during that time. These facts suggested that the adjusters had a permanent relationship with the companies that aligns with employee status.

Integral service. The final factor was “the extent to which the service rendered is an integral part of the alleged employer’s business.” By adjusting claims for TWIA, the adjusters allow TWIA to administer its insurance policies. And with regard to OCC, the company exists to provide insurance claim adjusting services to insurers. Because of the adjusters’ central role in both TWIA’s and OCC’s businesses, a jury could weigh this factor heavily in favor of employee status. Thus, the Scantland factors supported the adjusters’ claim that they are “employees” under the FLSA.

Totality of the circumstances. Under the totality of the circumstances, the adjusters acted more like employees depending on an employer than independent contractors with their own businesses. They adjusted claims for a single insurance company on a full-time basis for about two years under an indefinite at-will contract; they had no opportunity to work for anyone else without terminating that relationship; and they had little to no control over their hours or rate of pay.

Accordingly, the appeals court reversed and remanded the judgment of the district court.

The case is No. 23-13205.

Judge: Brasher, A.

Attorneys: Michael Starzyk (Starzyk & Associates) for Joel Galarza, Vicki Wimberly and Kathrine Carpenter. W. Jackson Wisdom (Martin Disiere Jefferson & Wisdom) for One Call Claims, LLC, Kristi Smoot and Kelly Smoot. Ann Abrams Price (Boulette Golden & Marin) for Texas Windstorm Insurance Association.

Companies: One Call Claims, LLC; Texas Windstorm Insurance Association

Cases: EmployeeStatus WageHour Overtime CoverageLiability AlabamaNews FloridaNews GeorgiaNews GCNNews