Labor & Employment Law Daily Wrap Up, EMPLOYEE STATUS—E.D. Va.: Employer misclassified security guards as independent contractors resulting in failure to pay overtime, (Sep 15, 2026)

By Ronald Miller, J.D.

The employees’ status as independent contractors or employees is determined under the “economic realities” test established by the Supreme Court.

A federal district court in Virginia granted a motion for partial summary judgment by security guards on claims that an employer misclassified them as independent contractors, resulting in failure to pay them proper overtime premiums. The undisputed facts showed that there were hardly any aspects of a guard’s performance over which DMV Protection did not exercise control and the other Silk factors supported a finding that the “economic realities” favored a finding of employee status. Moreover, the owner of the company was determined to be individually liable as an “employer” under the FLSA since he unilaterally made all decisions with respect to hiring, firing, rate of pay, and independent contractor classification (Rangel v. DMV Protection, LLC, No. 1:25-cv-01288 (AJT/LRV) (E.D. Va. Sept. 11, 2026)).

Independent contractor classification. The employer, DMV Protection, is a security service company that provides security personnel to secure its clients’ facilities and events. The employer classifies everyone on its payroll as independent contractors. Upon hiring, DMV requires its guards to sign an “Independent Contractor Agreement (ICA)” and an “Independent Contractor Handbook,” which memorialize the policies to which all DMV guards are subject.

Despite being classified as independent contractors, the guards cannot hire their own employees, subcontract their shifts to another subcontractor, grow their operation or income except by being promoted or assigned to a higher-paying site, or even arrange for a coworker to cover their shift without supervisor approval. To prevent conflicts of interest, the ICA requires security guards to provide notice and receive permission from DMV if they want to work for other security companies.

Employer control. DMV pays its guards on an hourly basis with no overtime premium. The hourly rate is set by DMV based on the client’s rate of pay, and the record reflects no input or negotiation by the guards on these rates. DMV does not require its guards to make any up-front investment regarding their work or to provide any job-related equipment whatsoever, and it provides the guards with, inter alia, DMV-branded uniforms, which the guards must return upon leaving DMV, radios, counters, badges, keys, vehicles, and gas.

All DMV guards perform essentially the same duties, which include monitoring the premises to prevent theft, violence, vandalism, or infractions of rules. DMV coordinates scheduling between the client and the guards. DMV retains the right to remove or reassign a guard if the client is dissatisfied with their performance.

Guards are required to notify DMV of anticipated late arrivals, early departures, and time-off requests and to conduct periodic check-ins during their shift. DMV also imposes various regulations on guards’ performance and onsite conduct, penalizing them for late arrivals or early departures, failing to wear the DMV-branded uniform, smoking, using their phone for non-work purposes, or disclosing to clients or other third parties DMV’s “confidential information.”

On August 4, 2025, an employee brought FLSA collective and class action claims under the wage-and-hour laws of multiple states. The court granted the employee’s motion for conditional certification of an FLSA collective and certification of a Rule 23 class. On August 6, 2026, the employees filed a motion for partial summary judgment, and the employer sought to decertify both classes.

Decertification of collective. The employer contended that the collective action should be decertified because the collective members were not clearly identified or similarly situated. However, the court observed that the class definition was precise and based on the employer’s detailed payroll records, with no evidence of widespread error or incomplete records. Therefore, the class definition did not support decertification.

Next, the employer argued that differences in certain factors, such as the guards’ wages, hours, duties, and duration of work for DMV rendered collective recovery impractical and inappropriate. The court pointed out that the facts relevant to these issues were identical in substance to those material to the employee’s summary judgment motion on issues of misclassification and the parties’ arguments centered on the “economic realities” of the security guards. The client-driven differences in duties and conduct requirements were minimal.

Finally, the court rejected the employer’s argument that “[f]airness and procedural considerations favor decertification [because] [t]rial would require individualized mini-trials to first determine if that individual plaintiff was actually a member of the intended class.” Again, the court pointed out that differences in the experiences of guards were relatively minor, and the mere existence of some factual differences among members of the collective did not render this form of action unfair or procedurally inefficient. Accordingly, the court denied the employer’s request to decertify the FLSA collective.

Rule 23 decertification. The employer contended that the Rule 23 class should be decertified because individual issues predominate over common questions, and that a class action is not superior to other available methods under Rule 23(b)(3). Again, the points raised by the employer failed because the class members’ terms and conditions of work were not materially different from one guard to another, and the record did not suggest that individual trials would be more fair or efficient. Thus, the employer failed to adequately establish that the court should decertify the Rule 23 class.

Misclassification. The employees sought summary judgment that DMV misclassified its security guards as independent contractors rather than employees. The Fourth Circuit has recognized six factors based on United States v. Silk, 331 U.S. 704 (1947), none of which are individually dispositive: (1) the degree of control the putative employer has over the manner in which the work is performed; (2) the worker’s opportunities for profit or loss dependent on his managerial skill; (3) the worker's investment in equipment and material, or his employment of other workers; (4) the degree of skill required for the work; (5) the permanence of the working relationship; and (6) the degree to which the services rendered are an integral part of the putative employer’s business.

Here, the undisputed facts show that there were hardly any aspects of a guard’s performance over which DMV did not exercise control. Accordingly, the first factor clearly weighed in favor of the employees.

The second Silk factor supported employment because the guards’ opportunities for profit and loss were minimal, consistent with low-skilled wage work. With respect to the fifth Silk factor, the permanency of the parties’ relationship, the record showed that DMV as a matter of course offered guards one-year contracts that could be extended month-to-month indefinitely. Thus, the court concluded that the guards were employees rather than independent contractors and were entitled to judgment as a matter of law on their claim that the employer misclassified its security guards.

Individual liability. Moreover, the court determined that DMV’s sole owner was individually liable under both the FLSA and various state wage laws. Whether an individual qualifies as an employer subject to FLSA liability is determined according to “economic realities” of the relationship between the various putative employers and their workers, especially on whether “the individual has sufficient operational control over the workers in question and the allegedly violative acts.

The uncontroverted evidence with respect to each of the Silk factors established as a matter of law that the owner was a statutory “employer.” The owner unilaterally made all decisions with respect to hiring, firing, rate of pay, and independent contractor classification, and he maintained all employment records. Accordingly, the employees were entitled to judgment as a matter of law that the owner was individually liable for each cause of action.

The case is No. 1:25-cv-01288 (AJT/LRV).

Judge: Trenga, A.

Attorneys: Jason Steuerwald (Getman, Sweeney & Dunn) for Jonathan Rangel and Mira Koroma. Jill Frazee Helwig (Executive Law Partners) for DMV Protection, LLC.

Companies: DMV Protection, LLC

Cases: EmployeeStatus WageHour Overtime CoverageLiability VirginiaNews