- The Supreme Court has declined to wade into the joint employment debate, denying review to DirecTV v. Hall, No. 15-1857 (4th Cir. Jan. 25, 2017). The move lets stand the Fair Labor Standards Act (FLSA) joint employer test recently adopted by the 4th Circuit, which strayed from other courts' tests and has been decried by the business community as setting too low a bar for establishing joint employment.
- The test allows a business to be held jointly liable for FLSA violations if it is not "completely disassociated" from the other employing entity. Such a standard is usually only applied in horizontal joint employment cases, according to Employment Law Daily.
- Business groups urged the 4th Circuit to rehear the case en banc, but it declined. With the High Court's rejection, a circuit split on vertical joint employer tests will remain.
Employers are dealing with various joint employment tests and with this denial, its unlikely they'll get clarity on this issue as it relates to the FLSA for some time. For now, employers in Maryland, North Carolina, South Carolina, Virginia and West Virginia will be subject to the 4th Circuit's test.
The U.S. Department of Labor also rescinded an Administrator's Interpretation on joint employment last year but has yet address the issue further.
Complicating matters, a different joint employment standard exists for purposes of the National Labor Relations Act (NLRA). The National Labor Relations Board recently rolled back its joint employment standard and returned to its pre-Obama stance.
Some stakeholders have called on Congress to adopt one standard for both the FLSA and the NLRA. A bill that would do just that was passed by the House in November and has been sent to the Senate for consideration.
For now, however, employers who depend on the franchising model or third-party contractors will need to keep an eye on both agencies and applicable circuit precedent.