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Wage and Hour Compliance– Multiple Employers?

On Behalf of | Feb 15, 2017 | Fair Labor Standards Act |

Usually it is obvious who is an “employer” under wage and hour laws, and the employees know who cuts their checks.  What about the situation when a worker is employed by a small affiliate to a larger organization?   Who is the “employer” for purposes of wage and hour law?

In a brand new opinion, the Fourth Circuit Court of Appeals found satellite television technicians hired by intermediary entities of DIRECTV may be “jointly” employed by DIRECTV.  According to the case, DIRECTV has a web of affiliated and unaffiliated service providers that it uses to hire technicians.  In this case, the technicians were hired by some combination of intermediary companies and subcontractors of DIRECTV.

The Court established a new test to decide whether or not an employee has “Joint Employers.”   If the employee performs work for two or more entities that are “not completely disassociated,” then courts must look at the two entities’ combined control over key terms and conditions of employment.  The Court identified the following six non-exhaustive factors to consider:

(1) Whether, formally or as a matter of practice, the 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 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 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  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.

The Court found DIRECTV and its intermediary entities codetermined the essential terms and conditions of the technician’s work.   DIRECTV was the main client of nearly all the intermediary entities, and it had the authority to direct, control, and supervise nearly all aspects of the technicians’ job.  DIRECTV controlled the assignment schedule system, and particularized the methods and standards of work.  The technicians were required to wear DIRECTV uniforms, carry DIRECTV ID cards, and display the company’s logo on their vehicles.  DIRECTV played a role in setting compensation, even though they didn’t actually issue paychecks. In the end, the Court concluded that the technicians made a plausible claim that they were jointly employed by DIRECTV and the intermediaries.

Employers need to make sure they comply with all wage and hours laws. Thatcher Zavaro & Mani represents both employee and employers in wage disputes. Contact Thatcher Zavaro & Mani for all wage and hour needs.