Eleventh Circuit Ruling Clarifies ‘Economic Realities’ Test for Determining Independent Contractor Status

October 29, 2025

On October 16, 2025, the U.S. Court of Appeals for the Eleventh Circuit ruled that three insurance adjusters had been misclassified as independent contractors because, based on a complete analysis of the reality of the adjusters’ working relationship with two insurance companies, a jury could reasonably find that the adjusters were employees.

 In so doing, the Eleventh Circuit reiterated for lower courts the importance of thoroughly analyzing the economic realities of a worker’s relationship with a company before determining whether a worker is an independent contractor or employee.

Quick Hits

In Galarza v. One Call Claims, LLC, No. 23-13205 (October 16, 2025), a three-judge panel of the Eleventh Circuit Court of Appeals unanimously reversed a federal district court’s 2023 ruling that insurance adjusters were independent contractors for One Call Claims and the Texas Windstorm Insurance Association.

The court concluded that the employers managed the adjusters’ work schedules, controlled their pay rates, directed work tasks, and limited their ability to work for other businesses. Accordingly, a jury could reasonably find that the workers were employees.

Under the Fair Labor Standards Act (FLSA), these factors may be relevant in determining whether an individual is an employee or independent contractor:

• the degree of the employer’s control over the work;

• the individual’s opportunity for profit or loss based on managerial skill;

• the individual’s investment in materials or hiring additional workers to complete the work;

• the degree to which the work requires a special skill;

• the degree of permanency and duration of the working relationship; and

• the extent to which the work is an integral part of the employer’s business.

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