Cejas Commercial Interiors, Inc., v. Jorge Torres-Lizama

The right-to-control test should be used to define the employment relationship in terms of direction and control or a contractual relationship.

Felix and Jorge Torres-Lizama appealed a judgment declaring that they were not employed by plaintiff, Cejas Commercial Interiors, Inc., within the meaning of Oregon's minimum-wage law, ORS 653.025. Torres-Lizamas contended that Cejas, a drywall contractor, was their employer while they did drywall work that Cejas subcontracted to Viewpoint Construction, LLC (Viewpoint). Consequently, Torres-Lizamas assert, Cejas was required to compensate them for their work when Viewpoint and its crew foreman, Miguel Muñoz, failed to pay them and disappeared. Defendants also argued that the trial court abused its discretion in awarding Torres-Lizamas attorney fees of $5,000 and an enhanced prevailing party fee of $5,000 on a counterclaim that defendants raised under the federal Fair Labor Standards Act (FLSA). The Court of Appeals held that the trial court did not err in holding that the economic-realities test applies under ORS 653.010(2). The court also did not err in concluding that Cejas did not employ Torres-Lizamas under ORS 653.010(2), and it properly entered a declaratory judgment for Cejas and rejected Torres-Lizamas' Oregon minimum-wage and overtime counterclaims on that basis. The trial court did err in concluding that there was no objectively reasonable basis for defendants' FLSA claim; as a result, the Court of Appeals reversed the attorney fee award and remanded for reconsideration of the enhanced prevailing party fee award. Award of attorney fees pursuant to ORS 20.105 reversed; award of enhanced prevailing party fee pursuant to ORS 20.190(3) vacated and remanded for reconsideration; otherwise affirmed.