SCOTUS avoids joint employer case


We had hoped the US Supreme Court would grant certiorari in DirecTV, LLC v. Hall [Briefs] – an interesting case on whether one is a"vertical" (rather than "horizontal") joint employer. But the Court denied certiorari on January 8 [Order].

The case involved a technician who installs and repairs TV satellite systems. DirecTV uses a lot of these technicians via a “Provider Network" by contracting with intermediary entities known as “Home Service Providers.” Trust me. DirecTV's network is too complex to explain in detail here. 

DirecTV described the issue this way:

"Whether the U.S. Court of Appeals for the 4th Circuit misinterpreted the Fair Labor Standards Act and its implementing regulation in holding – in conflict with the decisions of eight other circuits – that a claim of vertical joint employment must be evaluated by focusing on whether the putative joint employers are “completely disassociated” from one another with respect to the putative employee."

Hall described the issue this way:

"Whether an entity with the authority to direct, control, and supervise nearly every aspect of the day-to-day job duties of a worker is a joint employer for purposes of the Fair Labor Standards Act (FLSA)."

There are a lot of ways to look at whether two entities are actually joint employers – depending on whether you're looking at the NLRB or DOL or a court.

What DirecTV was complaining about was a 4th Circuit decision – Hall v. DirecTV (4th Cir 01/25/2017) [PDF] – which deviated from the analysis in other circuits.

One popular way to decide whether two entities are joint employers was articulated in Bonnette v. California Health and Welfare Agency, 704 F.2d 1465 (9th Cir 1983) [Opinion]. This would examine whether DirecTV (1) had the power to hire and fire the employee; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records.

But the 4th Circuit explained that Bonnette and other decisions “(1) improperly focus on the relationship between the employee and putative joint employer, rather than on the relationship between the putative joint employers, and (2) incorrectly frame the joint employment inquiry as solely a question of an employee’s ‘economic dependence’ on a putative joint employer.” As the 4th Circuit put it:

Under our framework, the “fundamental question” guiding the joint employment analysis is “whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine—formally or informally, directly or indirectly—the essential terms and conditions of the worker’s employment.”

And then they laid out six nonexhaustive factors to consider:

(1) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the ability to direct, control, or supervise the worker, whether by direct or indirect means; (2) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to— directly or indirectly—hire or fire the worker or modify the terms or conditions of the worker’s employment; (3) The degree of permanency and duration of the relationship between the putative joint employers; (4) Whether through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer; (5) Whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and (6) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll; providing workers’ compensation insurance; paying payroll taxes; or providing the facilities, equipment, tools, or materials necessary to complete the work.

So now there is a nice split between the circuits. Also the NLRB last month changed its method of deciding the issue of joint employers. See NLRB overrules Browning-Ferris on joint employer liability. And Congress is on the move with its own potential revision which would amend the FLSA’s definition of “employer” to limit the definition of a joint employer to an entity that “directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over essential terms and conditions of employment, such as hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, or administering employee discipline.” H.R. 3441, 115th Cong. § 2 (as passed by House of Representatives, Nov. 7, 2017).

All of this will keep employment lawyers pretty busy.