The U.S. Supreme Court has recently denied a request to weigh in on the Fair Labor Standards Act (FLSA) joint employment case, DirecTV v. Hall. A Fourth Circuit ruling in January of 2017 found that satellite installation technicians, who were treated as independent contractors, were actually jointly employed by DirecTV and the intermediary companies providing the installation work. The request was brought about based on the argument that the courts ignored a previous standard in favor of a new one.
The courts found the installation technicians were financially dependent on both companies, so they were considered employees and not independent contractors. Under this ruling, the technicians were determined to have been covered by the FLSA. As a result, the previous denial of overtime claims was reversed. This raises new concerns for many businesses that had previously excluded workers from the requirements of the Fair Labor Standards Act based on their categorization as an independent contractor.
The Background: Previous Rulings
Petitioners argue that every other Circuit having heard cases regarding joint employment have made their decisions based on whether the party in question held authority and control over the workers. This was typically determined by factors such as whether the employer had powers like:
Hiring and firing decisions
Determining pay rate
Directly paying the employee
Maintaining employee records
Formally or informally making decisions about the terms of employment.
Under the new ruling, an entity can be considered a joint employer if it's not completely disassociated from the employing entity. The petitioners against this ruling argue that it creates a huge expansion of liability under the Fair Labor Standards Act.
To further complicate matters, a different standard is applied when determining whether an employment relationship exists under the National Labor Relations Act (NLRA). This is determined by the National Labor Relations Board, which recently changed back to the pre-Obama standards.
There are several joint employment tests that employers must currently deal with. This recent denial makes it unlikely that they will receive clarity any time in the near future. In the meantime, the ruling impacts employers in South Carolina, North Carolina, Maryland, Virginia, and West Virginia.
There is also a bill in Congress proposing a single standard that would apply to both the FLSA and NLRA. It was passed by the House in November of 2017 and has been sent to the Senate for consideration.
Until further clarification is issued, employers are advised to pay close attention to both agencies and all circuit rulings. When in doubt, consider consulting with an employment lawyer who can help determine the level of liability under your current structure, like the experts here at Danz & Kronengold, P.L.