Tuesday, February 28, 2017

Wrongful Termination and the Internal Investigation in the District of Columbia

This blog continues to assess the relationship between wrongful termination and an internal/external investigation. We previously discussed Maryland law. We are now focusing on the law in the District of Columbia.

Whereas Maryland provided a distinction between an internal and external communication, the District of Columbia does not. Instead, D.C. law focuses on the substance of the communication.

Under District of Columbia law, “employment is presumed to be at will, unless the contract of employment expressly provides otherwise.” Thus, an employee who serves at the will of his or her employer may be discharged “at any time and for any reason, or for no reason at all.”

As in Maryland and Virginia, D.C. courts recognize three separate categories of protected conduct under the exception to the employment at-will doctrine: (1) refusing to engage in illegal activity; (2) exercising a constitutional or statutory right; and (3) reporting criminal conduct to supervisors or outside agencies.

Historically, an employee received protection only if terminated in retaliation for refusing to break the law. Thereafter, in Adams, D.C. recognized a cause of action for wrongful termination but warned that courts should confine the application of the public policy exception to very narrow cases where an employee’s refusal to violate the law was the exclusive cause for termination.

Thereafter, the D.C. Court of Appeals clarified that “the very narrow exception created in Adams should not be read in a manner that makes it impossible to recognize any additional public policy exceptions to the at-will doctrine that may warrant recognition.”

In Carl v. Children's Hospital, a nurse was terminated for testifying before the District of Columbia Council concerning proposed tort reform, for taking a position contrary to the interests of her employer, and for appearing as an expert witness for plaintiffs in medical malpractice cases. Though she did not assert a violation of any law, the D.C. Court of Appeals reasoned that the Adams decision did “not foreclose any additional ‘public policy’ exceptions to the general rule that employment contracts are always at will unless they expressly provide otherwise.” To fit within the parameters of the Carl decision, a terminated employee must “make a clear showing, based on some identifiable policy that [has] been officially declared in a statute or municipal regulation, or in the Constitution, that a new exception is needed” to the employment at-will doctrine. There must also be a “close fit” between the policy and the conduct at issue in the allegedly wrongful termination.

Thus, courts applying District of Columbia law have applied this public policy exception where employers fired at-will employees for: (1) refusing to violate statutory or regulatory laws, Adams; (2) reporting wrongdoing in government contracting, Myers v. Alutiiq Int’l Solutions, LLC; (3) refusing to participate in partisan political and legislative activities in violation of section 501(c)(3) of the Internal Revenue Code and Department of Labor regulations, Riggs v. Home Builders Inst.; (4) following District of Columbia food safety laws, Washington v.Guest Servs., Inc.; and (5) threatening to report improper storage of pharmaceuticals, Liberatore v. Melville Corp. In Coleman v. Dist. Of Columbia, the Court catalogued public policies that were sufficient to support a wrongful termination claim.

Likewise, an internal communication that meets the Carl requirements provides an employee with protection. For example, in Liberatore, the plaintiff, a drug store pharmacist/manager, was terminated after internally reporting the fact that the store’s failure to control its air temperature adversely affected the condition of certain drugs it stored. The D.C. Circuit noted that the case was not within the “narrower public policy exception announced in Adams” because the plaintiff “did not present his employer with an outright refusal to violate a specific statute or regulation,” and it was not clear that plaintiff's threat to report his employer to the FDA was the sole reason for his termination. However, the Court held that the plaintiff’s allegations were sufficient to support a claim for wrongful discharge because he internally reported – and threatened to report to the FDA – conditions that violated both federal and D.C. laws protecting the public from the purchase of adulterated drugs, thereby implicating an expanded public policy of the kind discussed in Carl. In doing so, it observed that D.C. law did not appear to “draw a distinction between a threat [to lodge a complaint] and an actual complaint to the appropriate enforcement official,” nor would it bar suit where the alleged illegal conduct by supervisors had been reported only to management.

The District of Columbia has recognized that where there is already a statutory framework in place, there is “no need to create a new exception to the at-will employment doctrine.” Thus, in Carter, the Court declined to create a public policy exception where the plaintiff's conduct “fell squarely under the aegis of the District's Whistleblower Protection Act,” which “provides that an employee aggrieved by a prohibited personnel action may bring a civil action for monetary and equitable relief.” For more information, look at LeFande v. District of Columbia and Kassem v. Washington Hosp. Center. In Kassem, the Court decided that the exception was unavailable “where the very statute creating the relied-upon public policy already contains a specific and significant remedy for the party aggrieved by its violation”. Overall, since Carl, wrongful termination in the District of Columbia has been held to encompass claims of discharge in retaliation for whistleblowing, as explained by the Court in Liberatore, Taylor v. WMATA, and Fingerhut v. Children’s Nat’l Med. Ctr.

After Carl, decisions in the District of Columbia have used a case-by-case analysis, initially resulting, in general, in a more liberal interpretation of the claim for wrongful discharge.

Recently, however, the U.S. District Court noted that the trend “following the Supreme Court’s restatement of pleading standards in Twombly and Iqbal, is towards requiring a closer fit between the public policy and the whistleblowing.” For example, in Mpoy v. Fenty, a special education teacher who alleged wrongful discharge after disclosing instructions from the principal to falsify test scores was determined not to have identified a clear mandate of public policy, and in Leyden v. Am. Accreditation Healthcare Comm’n, the plaintiff who alleged conflicts of interest at a healthcare accreditation organization was held to have failed to identify public policy specifically prohibiting the conduct she internally reported. The Clay decision cited with approval the summary from Leyden that the “common denominator” in viable wrongful discharge claims is “the existence of specific laws or regulations that clearly reflect a policy prohibiting the activity about which the employee complained whether or not the employer actually violated the law or regulation.”

In some of these cases, other federal or local laws may provide better protections. For example, a worker with a food safety issue could find relief from retaliation through the Food Safety Modernization Act (FSMA), 21 U.S.C. § 399d. FSMA claims must be filed with OSHA within 180 days of each adverse action. Sadly, workers with pharmaceutical safety issues have no specific job protections under federal law, even though the FDA regulates both food and medications. KCNF maintains a chart of available whistleblower protections here.

This blog was written by Marc Pasekoff.


This blog is provided to our readers for informational purposes only. It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Thursday, February 23, 2017

Wrongful Termination and the Internal Investigation in Maryland

Suppose a licensed medical provider inquired into a possible claim for wrongful termination. Further suppose that this former at-will employee questioned certain medical practices and initiated an internal investigation with the employer. After management’s investigation concluded that no misconduct occurred, management decided to terminate the employee.

This blog addresses implications of an internal investigation under Maryland law. Subsequent blogs will address implications under Virginia and District of Columbia law.

“At-will employment” is very common in the United States and means that the employee serves at the pleasure of the employer and may be discharged for any reason or no reason at all – except for an illegal reason. The typical exceptions to “at-will” are government civil service employment, which has certain Constitutional protections; statutes, such as the anti-discrimination laws, which prohibit termination for certain reasons; and contracts, either union contracts or individual contracts, which require a showing of “cause.”

In Maryland, wrongful discharge is another exception. To establish a claim for wrongful discharge, an employee must show that (a) the employee was discharged, (b) the discharge violated a clear mandate of public policy, and (c) there was a nexus between the employee’s conduct and the decision to fire the employee.

The public policy exception is narrow. Maryland courts have found wrongful discharge based on public policy in only two circumstances – when the employee refused to violate the law or the legal rights of a third party, and when the employee exercised a specific legal right or duty. Significantly, and contrary to common assumptions, the public policy exception to the discharge of an at-will employee in Maryland does not provide general protection for “whistleblowing.

Maryland’s Court of Appeals made clear that “internal” whistleblowing would not be protected in Wholey v. Sears Roebuck. Wholey was a former security officer for 24 years with Sears and was promoted to store security manager. In this position, his responsibilities included investigating suspicious behavior and reporting theft by both customers and employees. After observing the store manager engage in theft, he submitted a report to Sears’ district manager for security. The district manager authorized installation of a camera, but the surveillance was later removed by senior Sears officials and the investigation ended. Soon thereafter, Mr. Wholey was terminated.

Mr. Wholey won at trial, but his verdict was reversed on appeal. In a plurality opinion, the Court of Appeals recognized a new public policy exception to the employment at-will doctrine, stating that an employee who was fired for reporting illegal activities to the proper authorities could bring a viable claim under the wrongful discharge doctrine, but denied that protection to employees who made their reports to their chain of command. Thus, Mr. Wholey’s claim ultimately failed because he “merely investigate[d] suspected wrong-doing and discuss[ed] that investigation with co-employees or supervisors.” Consequently, the court created a distinction between external investigations (which sustained a claim for wrongful discharge) and internal reporting (which did not).

The “external/internal reporting dichotomy” remains in effect. However, the Wholey opinion offers additional guidance concerning the viability of a potential wrongful discharge claim. In particular, the Wholey Court stated that “one may have a viable claim of wrongful discharge if terminated for acting pursuant to a legal duty when the employee’s failure to perform that duty could result in potential liability.”

With respect to the medical provider at the beginning of this blog who was terminated after reporting and investigating certain medical practices, the circumstances are different. Our licensed medical provider is protected by the Maryland Health Care Worker Whistleblower Protection Act She was also required to comply with reporting and disclosures requirements under the Code of Maryland regulations (“COMAR”). One requirement was an affirmative duty to disclose certain alleged misconduct. Compare Bleich v. Florence Crittenton Serv., which recognized a wrongful discharge claim for an educator terminated for filing child abuse and neglect report as required under COMAR, with Thompson v. Memorial Hosp., which determined that a legal duty to report misadministration of radiation belonged to the hospital, not the employee-physicist (although internal reports of unsafe handling of radiation are protected by the federal Energy Reorganization Act). Conversely, the Court of Special Appeals has declined to find an exception based on general fiduciary duties.

An “esoteric theory” about acting in the “public good” by investigating criminal activity is insufficient. However, a viable claim for wrongful discharge may exist if an individual can “point to any statute or regulation pertaining to duties” that would hold the individual accountable for failing to investigate or report alleged misconduct.

Maryland’s General Assembly has not shown much interest in expanding whistleblower protections. If it chose, it could adopt the principles of federal statutes such as the Whistleblower Protection Enhancement Act, which protects employees from retaliation for disclosing violations of law, imminent threats to public health or safety, and gross financial mismanagement.

Federal courts have long recognized that whistleblower protections need to protect those who make reports to their supervisors, since that is how most employees normally raise an issue. See here and here. Yet even today, federal courts have split on the issue of whether SEC compliance issues are protected under the Dodd-Frank Act when they are raised only within the affected company. For example, in Asadi v. G.E. Energy (USA), L.L.C., the Fifth Circuit found no protection; in Wallace v. Tesoro Corp., the Fifth Circuit found SOX protection for internal disclosures; in Berman v. Neo@Ogilvy LLC, the Second Circuit adopted SEC guidance in finding internal reports are protected.

Even the United States Chamber of Commerce recognizes internal reporting as its preferred method of whistleblowing and fraud detection. It made these comments to the SEC on implementation of Section 21F of the Securities Exchange Act in December of 2010 (pp. 3-4):
Effective compliance programs rely heavily on internal reporting of potential violations of law and corporate policy to identify instances of non-compliance. These internal reporting mechanisms are cornerstones of effective compliance processes because they permit companies to discover instances of potential wrongdoing, to investigate the underlying facts, and to take remedial actions, including voluntary disclosures to relevant authorities, as the circumstances may warrant…
Protection for internal disclosures has found uneven protection from the courts. Employees who want to raise issues at work, but are afraid of retaliation, can benefit from early advice of legal counsel. Finding the right way to make a disclosure can make the difference between having job protections or not.


This blog was written by Marc Pasekoff.


This blog is provided to our readers for informational purposes only. It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Monday, February 20, 2017

Agreements Must Include OWBPA Language to Waive an Age Discrimination Claim

In the 1980’s, after the Age Discrimination in Employment Act (ADEA) was passed, American businesses realized they could not simply fire their older employees as in the past. Accordingly, older employees found themselves confronted with proposed separation agreements, under which in exchange for their irrevocable resignation and waiver of claims, they would receive their stock options (or some other benefit). Some of those employees sued nonetheless, alleging that they were the victims of age discrimination and their waivers were not “voluntary.”

Although the ADEA and Title VII are found in different parts of the U.S. Code, courts found their goals sufficiently similar to impose on ADEA waivers the requirements that they be signed “knowingly, willfully and free from coercion.” In making that determination, several courts adopted the following factors:

  • the plaintiff’s education and business experience,
  • the amount of time the plaintiff had possession of or access to the agreement before signing it
  • the role of plaintiff in deciding the terms of the agreement,
  • the clarity of the agreement,
  • whether the plaintiff was represented by or consulted with an attorney, and
  • whether the consideration given in exchange for the waiver exceeds employee benefits to which the employee was already entitled by contract or law.
EEOC v. Am. Express Publ’g Corp., 681 F. Supp. 216, 219 (S.D.N.Y. 1988), quoted in Bormann v. AT&T Commc’ns, Inc., 875 F.2d 399, 403 (2d Cir. 1989). The court in Bormann added that it would look at “whether an employer encourages or discourages an employee to consult an attorney . . . and whether the employee had a fair opportunity to do so.”

In 1990, Congress amended the ADEA by adding the Older Workers Benefit Protection Act (OWBPA), which establishes specific requirements for a “knowing and voluntary” release of ADEA claims. This statute was designed to protect the rights and benefits of older workers through a strict, unqualified statutory stricture on waivers. Specifically, the OWBPA, adopting the growing number of judicial decisions, requires satisfaction of the following seven factors for a waiver of age discrimination claims to be considered “knowing and voluntary”:

  1. A waiver must be written in a manner that can be clearly understood.
  2. A waiver must specifically refer to rights or claims arising under the ADEA.
  3. A waiver must advise the employee in writing to consult an attorney before accepting the agreement.
  4. A waiver must provide the employee with at least 21 days to consider the employer’s final offer.
  5. A waiver must give an employee seven days to revoke his or her signature.
  6. A waiver must not include rights and claims that may arise after the date on which the waiver is executed.
  7. A waiver must be supported by consideration in additional to that to which the employee already is entitled.
Items 3-4 must be included in the waiver agreement. Even when a waiver complies with these seven requirements, a waiver of age claims will be invalid and unenforceable if an employer used fraud, undue influence, or other improper conduct to coerce the employee into signing it or it if contains a material mistake, omission, or misstatement.

Prior to October 2016, the U.S. Equal Employment Opportunity Commission (EEOC or Commission) held that the protections of the OWBPA are only triggered when an employee raises an age discrimination claim before signing a waiver/release agreement. Thus, if a federal employee signed a waiver agreement for an EEO complaint alleging race discrimination, that waiver would preclude claims of age discrimination even if the agreement did not include the OWBPA language cited above.

In Hester S. v. EEOC, however, the Commission overruled that interpretation of the OWBPA. Specifically, the Commission held that “the OWBPA applies to waivers of ADEA rights or claims regardless of whether the rights or claims were raised before the execution of the waiver agreement.” In Hester S., the complainant initiated contact with an EEO counselor in April 2011, alleging discrimination on the basis of disability and in reprisal for protected EEO activity when she was issued a performance improvement plan and denied a reasonable accommodation. In June 2011, complainant expanded her bases to include race, national origin, sex, and age. In May 2011, complainant was presented with a settlement agreement, which she signed. Amongst other provisions, the settlement agreement stated:

(5) The Employee hereby agrees to accept the Agency’s actions detailed [above] in full resolution of any pending or anticipated claims or other rights of actions that occurred on or before the date of the signing of this Agreement . . . .

. . .

(7) The Employee represents that at the time of the signing of this Agreement, the Employee has no pending claims against the Agency, including but not limited to EEO complaints.

In August 2011 (almost three months after complainant signed the settlement agreement), complainant filed a formal EEO complaint alleging that the agency harassed and discriminated against her on the bases of race, sex, national origin, disability, age, and in reprisal for prior protected EEO activity arising under the Rehabilitation Act when the agency failed to provide her with a reasonable accommodation for her disability. In its final decision, the agency dismissed complainant’s complaint on the ground, among others, that it failed to state a claim because it was resolved by a settlement agreement.

On review, the Commission determined that, indeed, the settlement agreement constituted a waiver or release of complainant’s August 2011 EEO complaint and settled complainant’s claim that she was subjected to discrimination on the bases of race, national origin, sex, disability, and in reprisal for EEO activity—complainant’s non-age claims. Because the OWBPA governs waivers or releases of ADEA claims, however, the Commission made it clear that age claims cannot be validly waived unless the requirements of the OWBPA have been met—even if the age claim purportedly waived by a release was not filed until after the execution of the waiver. Thus, despite the agency’s assertion that complainant knowingly and voluntarily signed the agreement, because the complainant was not (1) advised in writing to consult with an attorney prior to executing the agreement, (2) given a period of at least 21 days within which to consider the agreement, and (3) given a seven-day period in which she could revoke the agreement after its execution, the Commission held that the waiver was not effective to waive complainant’s age discrimination claims and directed the agency to reinstate these claims.

Given the EEOC’s holding in Hester S., an agency’s failure to comply with the OWBPA’s stringent waiver safeguards will now void a settlement agreement, with regard to the ADEA claims, irrespective of whether the employee had filed an ADEA claim at the time the agreement was effected. This change in Commission precedent is consistent with the congressional purpose of the OWBPA: to prohibit employers from discriminating against individuals age 40 and older because of age—no exceptions.

By: Aaron Herreras


This blog is provided to our readers for informational purposes only. It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.

Friday, February 3, 2017

The Angst of Disclaimed Workers May Be Lifting

In an earlier blog post So Where Do I Fit In? The Angst of the Worker No One Wants to Claim, we discussed the dilemma that drivers for Uber and Lyft are facing when those companies classify them as independent contractors, rather than employees. This classification results in the drivers not being reimbursed for their business expenses, and not being paid at least minimum wage, overtime, or benefits. In an analogous but legally distinct context, courts grapple with whether workers can be jointly employed by two or more employers for purposes of paying minimum wages and overtime. Increasing numbers of workers are employed by temporary staffing agencies or subcontractors, which then provide these workers to other entities. So what happens when a worker works 32 hours for one entity and 16 for another––is she entitled to overtime? And if so, who is responsible for paying it? Not surprisingly, the lack of traditional identifiers in the employment relationship has led to some workers falling through the cracks of the employment laws. Fortunately, though, the Fourth Circuit has issued some recent rulings which recognize the modern-day realities of these workers, and which provide the legal protections they deserve.

On January 25, 2017, the Fourth Circuit issued two rulings in cases involving issues of unpaid overtime under the Fair Labor Standards Act (“FSLA”): Salinas. v. Commercial Interiors, Inc., and Hall v. DirectTV, LLC. In Salinas, the plaintiff workers were directly employed by J.I. General Contractors (“J.I.”), a framing and drywall installation subcontractor. J.I. worked nearly exclusively for Commercial Interiors, Inc. (“Commercial”). The plaintiffs sued both J.I. and Commercial under the FLSA and other state wage laws, claiming that the hours they worked for both entities should be aggregated to determine their eligibility for overtime under the FLSA.

The Fourth Circuit began its analysis with a look at the broad and remedial purposes of the FLSA, which is “to combat the pervasive ‘evils and dangers resulting from wages too low to buy the bare necessities of life and from long hours of work injurious to health.’” Further, “Congress intended the FLSA…‘to protect the rights of those who toil, of those who sacrifice a full measure of their freedom and talents to the use and profit of others.’” In order to achieve the FLSA’s “‘remedial and humanitarian purpose,’” Congress very broadly defined “employ” to mean “suffer or permit to work;” “employee” as “any individual employed by an employer;” and “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee.”

While the FLSA does not specifically reference “joint employment,” the Department of Labor’s regulations implementing the FLSA recognize that “‘[a] single individual may stand in the relation of an employee to two or more employers at the same time under the [FLSA].” The regulations distinguish between “separate and distinct employment” and “joint employment.” “Separate employment exists when ‘all the relevant facts establish that two or more employers are acting entirely independently of each other and are completely dissociated with respect to the’ individual’s employment.” “[J]oint employment exists when ‘the facts establish…that employment by one employer is not completely dissociated from employment by the other employer[].’” The regulations state that, “‘joint employers are responsible, both individually and jointly, for compliance with all applicable provisions of the [FLSA], including the overtime provisions...’ Accordingly, the hours an individual works for each joint employer in a single workweek must be aggregated to determine whether and to what extent the individual must be paid overtime to comply with the FLSA.”

Explaining that courts across the country have had difficulty developing coherent and consistently-applied tests for distinguishing between separate and joint employment, and recognizing that the Fourth Circuit itself had not identified specific factors courts should consider in determining whether a joint employment relationship exists, the Fourth Circuit set out to do so. The court articulated a two-step inquiry, the first of which involves an analysis of the relationship between the putative joint employers. The basic question to be resolved at the first step of the inquiry is whether “the persons or entities share, agree to allocate responsibility for, or otherwise codetermine-formally or informally, directly or indirectly-the essential terms and conditions of the worker’s employment.” The Fourth Circuit identified six non-exhaustive factors that courts should consider in this first step:
(1) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;

(2) Whether, formally or as a matter of practice, the putative 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 putative 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 a matter of practice, the putative 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.
Applying these factors, the Fourth Circuit concluded that the plaintiffs were jointly employed by J.I. and Commercial:
(1) Commercial not only supervised the plaintiffs’ work, but it also required the plaintiffs to hold themselves out as Commercial employees by wearing Commercial-branded clothing. The Fourth Circuit rejected Commercial’s argument that its supervision of the plaintiffs amounted only to “quality control,” but acknowledged “that an entity does not become a joint employer by engaging in the oversight necessary to ensure that a contractor’s services meet standards of quality and timeliness.” “But in this case, Commercial’s supervision of Plaintiffs went beyond ‘double-check[ing] to verify that the task was done properly.’” Similarly, the Fourth Circuit rejected Commercial’s contention that its foreman did not supervise the plaintiffs because the foreman “generally spoke only to J.I.’s supervisors and did not speak to Plaintiffs directly. The FLSA provides that indirect control is sufficient to render an entity an ‘employer’ under the statute.” “[S]upervision is present whether orders are communicated directly to the laborer or indirectly through the contractor.”

(2) While J.I was generally responsible for hiring and firing its employees, Commercial dictated the plaintiffs’ hours and occasionally required them to work additional hours or on additional days.

(3) and (4) The overwhelming majority of J.I.’s contracts were with Commercial, and the plaintiffs worked almost exclusively on Commercial jobsites.

(5) The plaintiffs worked on premises controlled by Commercial, and Commercial required them to sign in an out of the jobsite with Commercial foreman and supervised their actions while on the jobsite.

(6) Commercial supplied plaintiffs with all the tools, materials, and equipment necessary to perform their work.
In Hall, the Fourth Circuit similarly held that the plaintiffs, who installed and repaired DIRECTV equipment, were jointly employed by DIRECTV and DirectSat (an intermediary provider). “DIRECTV compelled Plaintiffs to obtain their work schedules and job assignments through DIRECTV’s centralized system and to follow ‘particularized methods and standards of installation to assure DIRECTV’s equipment is installed according to the dictates of DIRECTV’s policies and procedures.’” Additionally, “although Plaintiffs’ direct employers had formal firing authority, DIRECTV used its centralized work-assignment system to effectively terminate technicians by ceasing to assign them work.”

The second step of the analysis involves determining whether “the two entities’ combined influence over the terms and conditions of the worker’s employment render the worker an employee as opposed to an independent contractor.” At this stage of the analysis, a court considers “the ‘economic realities’ of the relationship between the worker and the putative employer’ or employers, in the event the worker is jointly employed. If a worker is not economically dependent on a putative employer, in other words, if a “worker[‘s] profit or loss depends upon his own creativity, ingenuity, and skill,” the worker “is an independent contractor outside of the FLSA’s scope.”

In United States v. Silk, the Supreme Court articulated six factors for determining whether a worker constitutes an employee or independent contractor: “‘(1) the degree of control that the putative employer has over the manner in which the work is performed; (2) the worker’s opportunities for profit or loss dependent on his managerial skill; (3) the worker’s investment in equipment or materials, or his employment of other workers; (4) the degree of skill required for the work; (5) the permanence of the working relationship; and (6) the degree to which the services rendered are an integral part of the putative employer’s business.’” When workers are deemed to have “one employment” with two or more entities under the first step of the analysis, these factors must be analyzed from the perspective of employment in the aggregate. For example, in Salinas, the court stated that, “with regard to the first factor, due to Commercial’s daily supervision of Plaintiffs, Commercial and J.I.–as Plaintiffs’ ‘one employer’–exercised greater control over Plaintiffs’ work than J.I. exercised alone.” The court concluded that the plaintiffs were employees (as opposed to independent contractors), based on their entire employment for both J.I. and Commercial.

The Fourth Circuit appears to have become a benevolent watchdog in FLSA claims in the joint employment context, making sure that employers do not escape liability for such claims by disclaiming those persons who toil for their benefit.


Written by Valerie A. Chastain.

This blog is provided to our readers for informational purposes only. It is not offered as legal advice. Communication of information through this blog does not create an attorney-client relationship. You should not rely upon information contained in this blog without first seeking professional legal advice. If you would like a telephone screening or consultation with a KCNF attorney, you are welcome to call 202-331-9260 to begin our intake process, or submit your legal issue at http://www.kcnlaw.com/Contact.shtml.