United States Court of Appeals' New FLSA Test: Part 2

On the same day that the United States Court of Appeals for the Fourth Circuit issued the Salinas opinion in our previous post, the Court also issued the following opinion further clarifying and applying the new test.

In Hall, et al. v. Albrecht, et al., No. 15-1857 (4th Cir. Jan. 25, 2017), Plaintiffs, satellite television technicians, alleged that DIRECTV and DirectSat, through a web of agreements with various affiliated and unaffiliated service providers, jointly employed Plaintiffs, and therefore were jointly and severally liable for any violations of the FLSA’s substantive provisions. 

The Court of Appeals stated that, in determining whether the relationship between two entities gives rise to joint employment, the District Courts should consider the following six, non-exhaustive factors:

(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.

In applying the test, the Court found that the alleged joint employer Defendants instituted and operated a fissured employment scheme, governed by a web of provider agreements, that endured throughout Plaintiffs’ periods of employment as DIRECTV technicians and was essential to the installation and repair of DIRECTV’s own products. DIRECTV was the principal—and, in many cases, only—client of the lower-level subcontractors, and DIRECTV often infused capital into or formally “absorbed” the subcontractors when necessary.  

Moreover, DIRECTV and DirectSat allocated, through provider agreements with one another and with subcontractors, the authority to direct, control, and supervise nearly every aspect of Plaintiffs’ day-to-day job duties.

DIRECTV, DirectSat, and other subcontractors shared authority over hiring, firing, and compensation. Although Plaintiffs’ direct employers had formal firing authority, DIRECTV used its centralized work-assignment system to effectively terminate technicians by ceasing to assign them work.  DIRECTV and members of its Provider Network also shared authority over technicians’ compensation. 

TAKEAWAY:

Employers must ensure that they are in compliance with this new FLSA test governing joint and several liability. Routine audits are the only effective way employers can remain FLSA compliant and minimize their exposure to costly litigation.

In addition to compliance audits and counsel, the employment attorneys at Luchansky Law are experienced litigators.  If you are in need of counsel or litigation representation, contact our firm today. 

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