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Media Alerts - Hall v. Direct TV,LLC -- Fourth Circuit
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March 14, 2017
  Hall v. Direct TV,LLC -- Fourth Circuit
DIRECTV Cannot Escape Claims that It Underpaid Employees

Areas of Law: Employment Law; Civil Procedure

Issue Presented: Whether the district court erred in finding that the Plaintiffs' claims should be dismissed because they did not sufficiently allege that the Defendants jointly employed them for purposes of the Fair Labor Standards Act ("FLSA").

Brief Summary: In a published opinion, the United States Court of Appeals for the Fourth Circuit reversed the district court's decision to dismiss the Plaintiffs' complaint. The court held that the Plaintiffs (who were satellite television technicians) adequately stated a claim under the FLSA because they sufficiently alleged the Defendants were jointly their employers and that they were employees, and not independent contractors of the Defendants.

Extended Summary: DIRECTV is the nation's largest satellite television provider and uses thousands of technicians to install and repair its satellite systems. DIRECTV manages the technicians through its "Provider Network." This network is organized as a pyramid in which DIRECTV contracts with home and secondary service providers who then contract with subcontractors. These subcontractors contract directly with the individual technicians. DirectSat was a home service provider in DIRECTV's network at the time of the filing of the relevant complaint. DirectSat was the middleman between DIRECTV and individual technicians. DirectSat implemented DIRECTV's hiring criteria, relayed DIRECTV's scheduling to the technicians using DIRECTV's work-assignment system, and supervised the technicians. DirectSat also maintained personnel files that were audited and regulated by DIRECTV. Additionally, DIRECTV required technicians to use DIRECTV equipment and attend DIRECTV training at Directsat facilities.

Between 2007 and 2014, each Plaintiff worked as a technician for DirectSat DIRECTV, or one of the other entities in the DIRECTV pyramid. Plaintiffs principal duty was to install and repair DIRECTV equipment. During their periods of employment, each Plaintiff was classified by their employer(s) as an independent contractor. The Plaintiffs alleged that DIRECTV directed and controlled Plaintiffs' work. For example, DIRECTV was the primary, if not the only client of each of the providers who served as the Plaintiffs' direct employers. Additionally, the Plaintiffs were required to wear DIRECTV gear, carry DIRECTV ID cards, and display the DIRECTV logo on their cars. DIRECTV also exercised quality control over each technician's work and controlled compensation. Finally, DIRECTV was allowed to terminate technicians by not assigning them work assignments through the work assignment system.

The Plaintiffs claimed they regularly worked in excess of forty hours per week, but were not paid overtime while they were DIRECTV technicians. So, the Plaintiffs filed various lawsuits in several jurisdictions, which were then consolidated. The Plaintiff's allege that the Defendants (DIRECTV and DirectSat) were their joint employers during the relevant period and that the Defendants' failure to pay overtime for the additional hours violated the overtime and minimum wage requirements of the Fair Labor Standards Act (FLSA). Additionally, the Plaintiffs brought claims under several Maryland wage statutes. The Defendants each moved to dismiss the Plaintiffs' Complaint, which was granted by the district court. The district court found that since the Plaintiffs did not allege that DIRECTV directly hired or fired them or controlled their compensation, the complaint did not allege facts that were sufficient to show DIRECTV was a joint employer. Additionally, the court concluded that the claims under the Maryland wage and labor statutes also failed. The Plaintiffs appealed the district court's dismissal.

The Fourth Circuit reversed the district court's decision finding that the Plaintiffs' allegations demonstrated that DIRECTV and DirectSat both jointly employed the Plaintiffs. The Fourth Circuit found that the district court (1) applied the improper legal test for determining whether entities are joint employers under the FLSA, and (2) misapplied the plausibility standard from Twombly and Iqbal. First, the court found that the district court incorrectly concluded that a worker must be an employee, as opposed to an independent contractor, of each joint employer for the entities to even be considered joint employers. Additionally, the Fourth Circuit found the district court improperly relied on Bonnette v. California, 704 F.2d 1465 (9th Cir. 1983), to determine whether the Defendants jointly employed the Plaintiffs.

The Fourth Circuit concluded that the correct inquiry involved two steps: (1) considering whether the Defendant and one or more additional entities shared, agreed to allocate responsibility for, or otherwise co-determined the key terms of the Plaintiffs' work; and (2) considering whether the worker was an employee or independent contractor by looking to the entire agreement as one agreement. Additionally, the Fourth Circuit concluded that Bonnette was not the correct test for determining whether two employers are joint employers. Instead, the 6-factor test announced in Salinas v. Commercial Interiors Inc., No. 15-1915, slip op. (argued Oct. 27, 2016), is the correct test for making the joint employment determination. Therefore, the court erred in granting the motion to dismiss.

Even with this determination, the Fourth Circuit had to consider whether the Plaintiffs' allegations were sufficient to state a plausible FLSA joint employment claim against the Defendants. The court found that the Plaintiffs stated plausible claims that DIRECTV and DirectSat were their joint employers because they alleged sufficiently that the companies codetermined the key terms and conditions of Plaintiffs' employment. Additionally, the court found that Plaintiffs were employees within the meaning of the FLSA. The court looked to the six factors from United States v. Silk in making this determination. It found that the Plaintiffs sufficiently alleged they were economically dependent on the Defendants while they were technicians.

Finally, the court considered the Defendants contention that the district court's determination should be affirmed because the Plaintiffs did not adequately "articulate a sufficiently detailed accounting of the number of uncompensated hours they worked during their respective periods of employment" to state a claim for unpaid overtime under the FLSA. The court noted that some courts have a strict standard and others have a more lenient standard in determining the sufficiency of the Plaintiffs accounting of their hours. Under the lenient standard, the Plaintiffs just need to state that they worked 40 hours and some additional hours, which they were not compensated for. The Fourth Circuit adopted the lenient standard in which "a plaintiff must provide sufficient factual allegations to support a reasonable inference that he or she worked more than forty hours in at least one workweek and that his or her employer failed to pay the requisite overtime premium for those over time hours." Additionally, the court carefully noted that plaintiffs do not have to specify the weeks, they just have to move the claim from conceivable to plausible. In this case, the Plaintiff's allegations provided a sufficient basis to support the reasonable inference that they were uncompensated for overtime hours while they were DIRECTV technicians.

To read the full opinion, click here.

Panel: Judges Wynn, Floyd, and Harris

Argument Date: 10/27/2016

Date of Issued Opinion: 01/25/2017

Docket Number: 15-1857

Decided: Reversed and remanded by published opinion.

Case Alert Author: Lauren Harrison, Univ. of Maryland Carey School of Law

Counsel: Larkin E. Walsh, STUEVE SIEGEL HANSON LLP, Kansas City, Missouri, for Appellants. Colin David Dougherty, FOX ROTHSCHILD LLP, Blue Bell, Pennsylvania, for Appellees. ON BRIEF: George A. Hanson, Kansas City, Missouri, Ryan D. O'Dell, STUEVE SIEGEL HANSON LLP, San Diego, 3 California, for Appellants. Nicholas T. Solosky, FOX ROTHSCHILD LLP, Washington, D.C., for Appellees.

Author of Opinion: Circuit Judge Wynn

Case Alert Supervisor: Professor Renée Hutchins

    Posted By: Renee Hutchins @ 03/14/2017 12:10 PM     4th Circuit  

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