Roslov v. DirecTV Inc.
218 F.Supp.3d 965, 2016 U.S. Dist. LEXIS 160734, 2016 WL 6892110 (2016)
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Rule of Law:
Under the Fair Labor Standards Act (FLSA), a company is not considered a joint employer of technicians hired by an intermediary service provider if the company's involvement is limited to setting quality control standards and it does not control the key economic realities of the relationship, such as hiring, firing, pay rates, or daily supervision.
Facts:
- DirecTV contracted with outside companies, called 'Service Providers,' to install its satellite systems for customers.
- These Service Providers, in turn, entered into agreements with technicians, including Boris Roslov and Reginald Degraftenreed, to perform the installation and service work.
- DirecTV established standards that technicians had to meet, including passing a DirecTV-approved training program, background check, and drug screen.
- Technicians owned their own vehicles, tools, computers, and cell phones, with some making substantial financial investments in their equipment.
- Roslov and Degraftenreed were hired and trained by their respective Service Providers (Elite Satellite Installations and Pro-Sat), not DirecTV.
- The Service Providers, not DirecTV, paid the technicians on a per-job basis, handled any pay disputes, and received notice when the technicians quit.
- Technicians had significant flexibility in their work, including the ability to trade work orders, request additional jobs, decline work, and take days off.
- When interacting with customers and performing installations, technicians were required to follow DirecTV's installation guidelines and wear approved apparel.
Procedural Posture:
- Plaintiffs Boris Roslov and Reginald Degraftenreed filed a lawsuit against DirecTV in the United States District Court, alleging violations of the Fair Labor Standards Act for failure to pay proper compensation and overtime.
- DirecTV filed a motion for summary judgment against plaintiff Boris Rostov, arguing that it was not his employer.
- Plaintiffs filed a cross-motion for partial summary judgment, asking the court to rule that DirecTV was their employer as a matter of law.
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Issue:
Does an employer-employee relationship exist under the Fair Labor Standards Act (FLSA) between a company (DirecTV) and technicians who are formally engaged and paid by intermediary service providers to install the company's products, when the company sets quality standards and work order protocols?
Opinions:
Majority - Brian S. Miller
No, an employer-employee relationship does not exist between DirecTV and the technicians. The court analyzed the 'economic realities' of the relationship using two different tests—the joint employer test and the independent contractor test—and found that under both, DirecTV was not the plaintiffs' employer. Under the four-factor joint employer test, the court found that: 1) DirecTV's role in hiring/firing was limited to quality control, not direct employment decisions; 2) DirecTV did not supervise or control the technicians' daily schedules, who had significant flexibility; 3) DirecTV did not determine the rate or method of payment, as technicians were paid per-job by the Service Providers; and 4) DirecTV did not maintain employment records like pay stubs or tax forms. Similarly, under the six-factor independent contractor test, the court found the technicians were independent contractors because they controlled their own work, made significant investments in their own tools and vehicles, controlled their own profit and loss, and required specialized skills. The court concluded that while the technicians' work was integral to DirecTV's business, that factor alone could not create an employment relationship where all other factors pointed to independent contractor status.
Analysis:
This decision reinforces the high bar for establishing a joint employer relationship under the FLSA in a tiered contracting structure. It clarifies that a primary company can enforce stringent quality control standards, training requirements, and branding on a subcontractor's workers without becoming their de facto employer. The case emphasizes that factors demonstrating economic independence—such as a worker's investment in tools, control over schedule, and being paid by an intermediary—are given significant weight in the 'economic realities' test. This ruling provides a blueprint for companies seeking to utilize an independent contractor model through intermediaries while minimizing FLSA liability.
