By Gerald L. Maatman, Jr., Alex W. Karasik, and Nicolette J. Zulli
Duane Morris Takeaways: In Ayala v. Nissan N. Am., Inc., No. 23-11027, 2024 U.S. App. LEXIS 2965 (11th Cir. Feb. 8, 2024), the Eleventh Circuit unanimously upheld a District Court’s decision granting Nissan’s motion for summary judgment in a wage & hour class and collective action. It held that none of the eight factors for determining joint employment weighed in favor of the company. The Eleventh Circuit further affirmed the District Court’s denial of both Rule 23 class action certification and conditional certification of the collective action under the FLSA.
The Eleventh Circuit’s opinion offers a treasure trove of insights regarding the crucial joint employer issue — particularly for employers who operate in a business-partnership dynamic where one entity (e.g., a manufacturer or staffing company) maintains oversight and/or indirect influence over the employees of the other entity (e.g., a car dealership or contractor) that handles payroll and/or hiring and firing processes.
Case Background
Two automotive service employees (“Technicians”) working at Florida Nissan dealerships filed suit against Nissan, alleging violations of the FLSA and the Florida Minimum Wage Act (“FMWA”), for failure to pay wages as required by law. Id. at *3. They also sought conditional certification as a collective action pursuant to the FLSA, 29 U.S.C. § 216(b), as well as certification of a class action under Rule 23.
The Technicians alleged they performed vehicle repair and maintenance on behalf of Nissan at the dealerships but were not compensated as required by law. Id. Specifically, they pointed to Nissan’s Assurance Products Resource Manual (“APRM”) and Dealership Agreements, which determined how much Nissan paid dealerships for warranty work conducted by technicians, regardless of how long the work took. Pursuant to the APRM and the Dealership Agreements, Nissan agreed with each dealership to reimburse the dealership according to the “flat-rate” system. Id. at *3.
The Technicians argued that — when the warranty work took longer than the “flat-rate time” determined by Nissan, thus limiting Nissan’s reimbursement to the dealership — the result is that they were underpaid by the dealership. Id. at *4. As a result, the Technicians asserted that Nissan was a joint employer, which Nissan opposed. The District Court agreed with Nissan and granted its motion for summary judgment. The Technicians appealed. Id. at *2.
The Eleventh’s Circuit’s Decision
The Eleventh Circuit affirmed the District Court’s order granting summary judgment and denying class certification under Rule 23 and conditional certification of a collective action under 29 U.S.C. § 216(b). Id. at *20.
On appeal, the Technicians argued that the District Court erred in granting summary judgment, because it failed to consider all admissible record evidence that they presented. Id. at *2. They further argued that the District Court erred in denying their motions for certification. First, the Eleventh Circuit rejected the Technicians’ argument that summary judgment was improper, after applying the eight-factor test under Layton v. DHL Express (USA), Inc., 686 F.3d 1172 (11th Cir. 2012), which is guided by five principles that are focused on indicators of “economic dependence,” for evaluating whether an employment relationship exists under the FLSA. These factors include: (1) The nature and degree of control of the workers; (2) The degree of supervision, direct or indirect, of the work; (3) The power to determine the pay rates or the methods of payment of the workers; (4) The right, directly or indirectly, to hire, fire, or modify the employment conditions of the workers; (5) Preparation of the payroll and payment of wages; (6) Ownership of the facilities where work occurred; (7) Performance of a specialty job integral to the asserted joint employer’s business; (8) The relative investments of the asserted joint employer in equipment and facilities used by the workers. Id. at *6-7.
The Eleventh Circuit held that none of these factors weighed in favor of a finding that Nissan was a joint employer of the Technicians. Id. at *22. Its analysis greatly emphasized the Technicians’ (i) failure to identify any specific, substantive content in Nissan’s 233-page APRM or its Anomalous Repair Control Program, and (ii) their reliance on conclusory and uncorroborated allegations in declarations and affidavits. The Eleventh Circuit opined that this was insufficient to show the District Court failed to consider relevant evidence. Id. at *8, *16. The Eleventh Circuit relied primarily upon a comparison to its prior decisions in Layton, Aimable v. Long & Scott Farms, 20 F.3d 434 (11th Cir. 1994), and Martinez-Mendoza v. Champion Int’l Corp., 340 F.3d 1200 (11th Cir. 2003), ultimately concluding that the relevant factors in this case weigh more heavily against joint employment. Id. at *18.
The Eleventh Circuit also rejected the Technicians’ argument that the District Court erred in denying both certification of a class action under Rule 23 and conditional certification of a collective action under § 216(b). The Eleventh Circuit opined that the putative class members would be employed by different dealers, making the inquiries about their pay “highly individualized and unwieldy.” Id. at *23. This, in turn, meant that the employees would not be similarly situated (as required for a collective action under the FLSA) and that there would not be sufficient common facts (as required for a class action under Rule 23). Id.
Implications For Employers
The Ayala decision is notable in that it offers a novel glimpse into the Eleventh Circuit’s approach to construing the language of employer policies to determine joint-employer status. To that end, the decision not only calls for employers to assess their business relationships to those it considers employees versus contractors, but also highlights the importance of constructing written policies and procedures with an eye toward the eight factors used to determine joint employer status.