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DIRECTV Requests That The US Supreme Court Decide Applicable Standard Regarding Joint Employment Under the FLSA.

Published by on June 20, 2017

The contrasting views of whether to focus on the employer-employer relationship or the employer-employee relationship can work to impede the growth and operations of multi-state businesses.

On June 6, 2017, DIRECTV petitioned the United States Supreme Court for writ of certiorari in Hall v. DIRECTV, 846 F.3d 757 (4th Cir. 2017). In the petition, DIRECTV requested that the Supreme Court decide the applicable legal standard for determining joint employment under the Fair Labor Standards Act (FLSA).

In Hall v. DIRECTV, the Fourth Circuit Court of Appeal ruled that the proper analysis for FLSA joint-employment cases is the two-step framework established in Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298 (4th Cir. 2006). Under Schultz, courts must first determine whether purported joint employers, “agreed to allocate responsibility for, or otherwise codetermined the key terms and conditions of [a] plaintiff’s work.” If the court determines that the purported joint-employers “codetermined the key terms and conditions of the worker’s employment,” then courts must next consider whether the “combined influence over the terms and conditions of the worker’s employment render the worker an employee as opposed to an independent contractor.” If, however, the entities are dissociated with regard to the “key terms and conditions,” courts must determine whether the worker is an employee or independent contractor with regard to each alleged employer separately.

This approach is in contrast to the standard stemming from the Ninth Circuit Court of Appeal’s decision in Bonnette v. California Health & Welfare Agency, 704 F.2d 1465 (9th Cir. 1983). The Bonnette court identified four non-exclusive factors to guide the joint-employment inquiry. Bonnette focuses on the purported joint employers’ relationship with the individual employee by asking “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.”

In the Hall decision, the Fourth Circuit stated that Bonnette incorrectly frames the joint employment inquiry as “one of economic dependence,” when rather, the relationship between the purported joint employers should be the crux of analysis. In the Fourth Circuit’s broader view, courts should look to whether the purported employers agreed to “allocate responsibility for. . . the essential terms and conditions of the worker’s employment.” Additionally, the Fourth Circuit’s decision rejected the assertion that an FLSA defendant is subject to joint employer liability only if its suggestions are followed “slavishly” by the plaintiff’s employer.

Welter Insight

The contrasting views of whether to focus on the employer-employer relationship or the employer-employee relationship can work to impede the growth and operations of multi-state businesses. The plethora of decisions attempting to make sense of what standard to apply only adds to this confusion. Accordingly, guidance from the United States Supreme Court would clarify the applicable standard. In the interim, employers who do business in the Fourth Circuit (Maryland, North Carolina, South Carolina, Virginia and West Virginia) should review their relationships with their independent contractors to ensure they are not classified as a joint-employer under the broad analysis set out by the Fourth Circuit.

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