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DirecTV asks Supreme Court to nix Fourth Circuit’s ‘new’ joint employer test

By Pamela Wolf, J.D.

The Supreme Court has been asked to take up the question of exactly under what circumstances an entity that is not a direct employer may be held liable under the FLSA as a joint employer. DirecTV, LLC, and DirectSat, USA, LLC, have filed a petition for certiorari asking the Court to scrutinize a January 2017 Fourth Circuit ruling, in DirecTV v. Hall, that satellite installation technicians were jointly employed by the satellite TV provider and the intermediary companies with whom it contracted for installation work. The petitioners say that the Fourth Circuit threw away the usual joint employer test in favor of a “new” one.

The appeals court found that in their “one employment” with the two entities, the technicians were economically dependent on them, and so were employees, not independent contractors, under the FLSA and Maryland wage law. Reversing dismissal of the technicians’ overtime claims, the Fourth Circuit found the district court had applied the wrong joint employment test and an unduly high evidentiary burden on a motion to dismiss.

Departure from other circuits. The petitioners assert, among other things, that certiorari should be granted because the Fourth Circuit’s ruling in this case departed from every other circuit to have considered the issue. Prior to the Fourth Circuit’s ruling, courts have evaluated joint employer claims by assessing whether the putative joint employer exercises the authority and control over the employee which is typical of employment relationships, according to the petition for certiorari. In making that inquiry, courts have considered relevant factors that include whether the alleged employer has the right to hire and fire the employee; pays or sets the employee’s pay; maintains employment records for the employee; or otherwise controls the terms and conditions of the employee’s employment, either formally or informally, the petition states.

But in this case and a companion case, the Fourth Circuit swept aside that uniform test, according to the petition, in favor of one under which it is “the relationship between the punitive joint employers that matters.” Pursuant to this view, “an entity may be deemed a joint employer of employees who work for another entity if it is not ‘completely disassociated’ from that entity with respect to the employee.” This is a very low bar, the petitioners assert. Moreover, nothing in the FLSA or its implementing regulations justifies what the petitioners see as this “dramatic expansion” of FLSA liability.

The standard applied by the Fourth Circuit is, in the view of the Department of Labor, appropriate only in “horizontal joint employment” cases, not “vertical joint employment” situations like this case, the petition asserts. Vertical joint employment is at issue when employees who work for an entity that provides services to another entity allege that the two entities are both their employers. Horizontal joint employment is at issue when an employee who has direct relationships with two or more employers contends the employers should be treated as joint employers for FLSA purposes.

The petitioners urge the Justices to “correct the Fourth Circuit’s manifest error and restore uniformity in this critical area of employment law” by reversing the appeals court.