IFA Files Joint Amicus with Franchisees to Again Fight against Joint-Employer
The International Franchise Association last week filed a joint amicus brief with the Coalition of Franchisee Associations (CFA), Asian American Hotel Owners Association (AAHOA), American Hotel & Lodging Association (AHLA), and the Restaurant Law Center to combat the decision by the U.S. Court of Appeals, Fourth Circuit, which claimed multiple entities should be held jointly responsible for the same employees.
In DirecTV, LLC and DirectSat USA, LLC v. Marlon Hall, et al., the court held that the "fundamental question" guiding the joint-employment analysis is whether two or more persons or entities are not completely disassociated with respect to a worker.
In response to the decision, Michael Layman, IFA VP of Federal Government Relations, declared, "The Fourth Circuit's DIRECTV decision exacerbated the differing joint employment standards that local franchise businesses must comply with under the Fair Labor Standards Act. Small business owners deserve as much clarity and certainty as possible, so they can continue to create jobs and serve their communities, and we urge the courts to resolve the conflict among the circuits by adopting a common law agency joint-employer standard."
In the joint amicus brief, the associations plead with the Fourth Circuit to grant a cert petition, "allowing the Supreme Court to review the decision, as the IFA seeks to demonstrate that this new joint-employer standard makes it difficult for the franchise business model to continue in the form that has been successful for decades."
Layman emphasized, "Franchising is a powerhouse of small business economic activity and wrongfully defining franchisees as employees of the franchisors instead of as business owners, threatens the viability of franchising as a business model."
While the DirecTV case is not related to franchising, the results of the litigation could affect the franchise business community if franchisor and franchisee are then determined to be two entities under the definition of "joint employer."
Last January, the Fourth Circuit ruled that DirecTV would have to fight against two consolidated lawsuits from former satellite technicians who claim they were misclassified as independent contractors instead of employees, by reversing a lower court's decision that DirecTV wasn't a joint employer under the Fair Labor Standards Act. The July 2015 ruling had found that the television company did not qualify as "joint employer" during the time period the technicians claimed they were improperly denied overtime compensation.
A Law360 article last January stated that the lawsuit stemmed from "DirecTV's practice of directly employing some of the technicians who install and repair satellite systems for customers nationwide, while managing many others through the company's 'provider network' of intermediary entities." It explains, "Those intermediaries generally contract with a patchwork of subcontractors, who in turn contract with individual technicians." DirectSat USA is one of those intermediaries.
The law report said that the technicians claimed that DirecTV and DirectSat qualified as joint employers, as DirectSat implemented and enforced DirecTV's hiring criteria for technicians, and relayed scheduling decisions from DirecTV to techs using its centralized work-assignment system. The Fourth Circuit determined that technicians' complaint was replete with allegations the DirecTV, DirectSat and other members of the network provider shared authority over hiring.