Employment Law Daily Jury to decide whether DIRECTV must pay overtime as satellite tech’s employer
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Thursday, October 19, 2017

Jury to decide whether DIRECTV must pay overtime as satellite tech’s employer

By Kathleen Kapusta, J.D.

Denying summary judgment on each of the seven grounds sought by DIRECTV against the FLSA claims of a technician who installed the company’s satellite systems, a federal district court in Kansas found fact issues as to whether the tech was an independent contractor or an employee; whether DIRECTV was his joint employer; whether it knew he was working unpaid overtime; whether the company was exempt from paying overtime; whether the tech could prove his overtime work; and whether DIRECTV willfully violated the FLSA (Renteria-Camacho v. DIRECTV, Inc., October 16, 2017, Murguia, C.).

DIRECTV uses some W-2 employees, some W-2 employees of other entities, and some independent contractors to complete its work, as well as a computer program called SIEBEL to manage work orders. Once a sale is made to a customer, a work order is created in SIEBEL. Customers book appointment windows and SIEBEL assigns work to technicians based on individual technicians’ tech ID numbers.

For approximately two years, the plaintiff worked for Speedy and Quest, two contractors that fulfilled work orders for installation and servicing of DIRECTV systems. Both companies had entered into Service Provider Agreements (SPAs) that were intended to create an independent contractor relationship between them and DIRECTV. The SPAs included quality and technical requirements that applied to the companies’ subcontractors and technicians. Claiming that he worked an average of between 50 and 60 hours per week, the plaintiff sued DIRECTV under the FLSA, alleging unpaid overtime and minimum wage violations.

Independent contractor or employee? Moving for summary judgment, DIRECTV first argued that the plaintiff was an independent contractor, not an employee, and was therefore not entitled to overtime compensation. Applying the economic realities test, the court found fact issues as to the degree of control DIRECTV exercised over him. Although his immediate supervisors were Quest and Speedy, the court noted that DIRECTV had the right to constructively fire a tech by simply not assigning him work, and it maintained some control over which techs the subcontractors hired by requiring that they meet certain qualifications, including possessing a certification, passing a drug test, and having a background check.

It was also unclear as to whether and how much DIRECTV monitored the plaintiff’s work or work quality. While SIEBEL scheduled work orders with his tech ID number, he could also make some decisions about the order of appointments, was able to run errands during the day, could ask a supervisor for more work on slow days, and was sometimes able to get more work by taking jobs assigned to other techs.

Also in dispute was his opportunity for profit and loss. Although the plaintiff could seek more work, it was unclear how often he was able to take on additional jobs, and thus his opportunity to increase profits based on jobs assigned could have been limited, the court noted. However, there was evidence he may have earned income from selling additional products to customers when working on a job.

And while he made substantial investments in equipment when he purchased a work truck, fax machine, computer, cell phone, GPS, and uniform, and took tax deductions on at least some of this equipment, his investments were very small compared to the amount DIRECTV, or even Speedy or Quest, invested in their operations, the court observed, finding this weighed in his favor.

As to the permanence of his working relationship with DIRECTV, while the plaintiff had no contract with the company and worked for separate subcontractors during his tenure, the facts did not establish that the work he performed for over a decade installing DIRECTV systems underwent significant change. There were also fact issues as to whether his work was highly skilled or technical, as the parties disagreed as to whether his job was complicated or could be done with minimal training. Finally, the court found his argument that DIRECTV would have no business without techs to install and maintain satellite systems was sufficient to establish a material question as to whether his work was integral to the company’s business. Thus, it was up to a jury to determine whether he was an independent contractor or an employee.

Joint employer? Turning to whether DIRECTV was the plaintiff’s joint employer, the court found that at the very least, it has some authority over who was hired or fired because it set certain minimum requirements in the SPAs and it had the right to stop assigning work to certain techs or to take a tech out of the field. Further, there was evidence showing the SIEBEL system generally dictated the plaintiff’s schedule and that he was required to adhere to certain conditions of employment including wearing a uniform, driving a “work truck,” keeping a current certification, and adhering to DIRECTV’s guidelines.

And while he was paid by Speedy and Quest, there were fact issues as to whether DIRECTV knew technicians were required to absorb the cost of chargebacks issued by DIRECTV when customers complained, techs were late, or work was not done properly. Finally, noting that DIRECTV tracked performance data and maintained files on each tech, the court refused to grant summary judgment in favor of DIRECTV on the joint employer issue.

Knowledge of overtime. There was also sufficient evidence that DIRECTV at least should have known the plaintiff was working overtime, said the court, noting that he worked, if not exclusively, nearly exclusively for the company and claimed to have worked on average around 10 to 15 hours of overtime weekly. Moreover, DIRECTV did not dispute it knew he was paid on a piece rate basis. This fact, the plaintiff argued, in conjunction with the fact that it paid its W-2 employees an additional amount, showed it should have known he was he was not paid for overtime.

Exemption. Nor was DIRECTV entitled to summary judgment on its claim that it was exempt from paying overtime under FLSA Section 207(i). There was no evidence the plaintiff’s employer, whoever that is determined to be, tracked his hours and pay and therefore it was unable to show his regular rate of pay during the week was at least one and one half times minimum wage as required for the exemption to apply.

Proof of overtime work. Noting that the plaintiff testified that his overtime hours were between 10 and 15 hours per week and that he was uncompensated for drive time and business expenses, the court found he met his burden to show he performed work for which he was not sufficiently compensated. While DIRECTV argued he was required to provide more evidence than his assertions under oath, the court pointed out that employers have the statutory duty to keep records, not employees. And because DIRECTV did not offer any evidence rebutting his evidence, it would be up to a jury to decide the credibility of his estimates.

Willful violation? As to the plaintiff’s contention that DIRECTV’s business structure—in which it intentionally tried to maintain plausible deniability by calling technicians independent contractors while retaining control over all aspects of technician employment—was evidence of a willful violation of the FLSA, the court noted that such “fissured employment” schemes are not per se violations of the Act. They do however, raise significant questions about whether such schemes undermine workers’ access to the FLSA’s benefits, including basic labor standards like minimum wage and overtime compensation, said the court. This, together with evidence that DIRECTV has been involved in similar lawsuits alleging wage and hour violations involving technicians, was sufficient to deny summary judgment as to this issue.

Unclean hands. Finally the court rejected DIRECTV’s argument that the plaintiff should be barred by the doctrine of unclean hands from bringing his claims because he assumed his father’s identity to obtain a technician ID number. Noting evidence that the plaintiff’s supervisors—or even vicariously DIRECTV—encouraged, facilitated, or condoned his assumption of his father’s identity to obtain employment under false pretenses, the court found it would be unjust to acknowledge this evidence and also find as a matter of law that he was unable to bring his claims under the FLSA.

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