By Chris Opfer | An appeals panel in Washington is expected to weigh in soon on the heated debate over liability for affiliated businesses, but a separate case involving Maryland television technicians may be the first to get the issue to the U.S. Supreme Court.
The justices could decide as soon as September whether to take up the case, in which the U.S. Court of Appeals for the Fourth Circuitsaid DirecTV is liable as a joint employer of technicians who were hired by an intermediary and claim they weren’t paid overtime ( Hall v. DIRECTV, LLC , U.S., No. 16-01449). That would give the high court a crack at an issue that’s already getting a lot of attention from advocates, lawmakers, and lobbyists.
“This could apply really to any company of significant size doing business across the country if the decision is adopted and applied by other courts,” Julie Totten, who represents technology and other businesses as a partner at Orrick, told Bloomberg BNA of the DirecTV case. “Any company that hires any other company as a vendor to perform some service for it is likely to be deemed a joint employer under the Fourth Circuit’s test.”
The U.S. Court of Appeals for the D.C. Circuit is mulling a separate case— Browning-Ferris —in which the National Labor Relations Board also took an expansive view of joint employer liability. The board said a company could be tagged as a joint employer even if it exerts only indirect control over workers.
‘Skin in the Game’
Supporters say wider views of joint employment capture the reality of today’s workplace, where staffing and a maze of other contractual relationships help some businesses skirt responsibility to their workers.
“The importance of joint employment for workers is that it forces all of the businesses who have skin in the game to be responsible for compliance with our basic labor standards,” David Weil, who ran the Labor Department’s Wage and Hour Division in the Obama administration, told Bloomberg BNA. The DOL recently scrappedinformal guidance issued by Weil, in which he said joint employer liability should be read as being “as broad as possible” to cover a wide range of employment relationships.
The DirecTV case also features a dispute over worker classification, another high-profile issue for labor and business advocates. The technicians say they were wrongly classified as independent contractors, a status that means they’re not covered by federal wage-and-hour laws.
“We comply with the law, including wage and hour laws, and expect our vendors to do the same,” DirecTV spokesman Marty Richter told Bloomberg BNA via email. “The Fourth Circuit ruling deviates from the standards for joint employment applied by all other circuits in wage and hour cases and threatens many routine vendor, dealer and franchise relationships. We’re hopeful the Supreme Court grants our petition and rejects the Fourth Circuit’s ruling.”
The franchise industry and other business advocates say moves to expand joint employer liability are a boon for plaintiffs’ attorneys looking for deeper pockets and labor unions facing falling membership numbers. A Supreme Court decision cementing either the Fourth Circuit or NLRB decision could cause a fundamental shift in the way many companies do business, they argue.
Several attorneys told Bloomberg BNA the DirecTV case is ripe for Supreme Court review because it highlights a rift among the appeals courts. The Fourth Circuit noted in the decision that “courts in various jurisdictions within this Circuit and throughout the country” have “applied numerous, distinct, multifactor joint employment tests.”
“It’s not just a small split among the circuits,” said Thomas O’Connell, a lawyer with Best Best & Krieger who recently filed abrief in the case on behalf of the International Franchise Association, the Restaurant Law Center, and other industry groups. “Each circuit has various differences.”
The Fourth Circuit said DirecTV’s pyramid network of technicians created a joint employment relationship between the company and DirectSat, the intermediary businesses that hired the workers. It noted in particular that DirecTV set the criteria that DirectSat used to consider job applicants, dictated the technicians’ schedules via a centralized assignment system, and generally supervised their work.
“DirecTV told them when to go to work, where to go to work, and how to do the job,” said George Hanson, a lawyer with Stueve Siegel Hanson who is representing the technicians. “Every facet of the work was directly controlled by DirecTV.”
The Fourth Circuit reversed a district judge’s decision finding that the technicians weren’t DirecTV employees because the company didn’t actually hire them and didn’t set their pay rates. The appeals panel in a 3-0 decision said the judge disregarded the relationship between DirecTV and DirectSat and used the wrong framework for determining joint employment.
The panel rejected the test developed by the Ninth Circuit some 34 years ago ( Bonnette v. California Health and Welfare Agency, 704 F.2d 1465, 26 WH Cases 152 (9th Cir. 1983). Citing a separate decision issued the same day, the court said the Bonnette test’s focus on common law agency principles was too narrow and didn’t gauge the relationship between potential joint employers.
The court said judges should consider six factors in mulling a joint employer question. Those factors include whether the employers share the power to supervise the workers, the permanency of the employers’ relationship, and whether one employer controls the other.
That’s different than the NLRB’s analysis in Browning-Ferris, but both approaches have been said to be rooted in “economic realities.”
The board said Browning-Ferris Industries was on the hook for labor violations alleged by sorters, screen cleaners, and housekeepers provided by Leadpoint Business Services to work at a BFI recycling plant in Northern California. The NLRB focused on the company’s indirect control over the workers, including by restricting who Leadpoint could hire and requiring Leadpoint to pay those workers no more than BFI employees in comparable jobs.
Critics of both decisions say courts should focus on direct control and whether a company like DirecTV actually sets the terms and conditions for the workers’ jobs.
Browning-Ferris involves claims under the National Labor Relations Act, but some lawmakers and business advocates have said they’d like to see a single joint employer test for all federal workplace laws to give businesses and workers clarity. The board is expected to walk back the decision if the Senate confirms President Donald Trump’s picks for two vacancies on the five-member NLRB. That would give the board its first Republican majority in nearly a decade.
Meanwhile, the clock is ticking.
“The first case that makes it to the Supreme Court on joint employer is going to be the most important one,” O’Connell said. “Whatever the court says could set a precedent.”