Martin v. Sprint United Management Co.
273 F. Supp. 3d 404
S.D.N.Y.2017Background
- Plaintiffs Martin and Singleton (plus opt-ins) worked as field agents collecting Lifeline Program applications for Sprint’s Assurance Wireless; they were hired and supervised day-to-day by Wallace Morgan (an ISO subcontractor to Credico).
- Credico contracted with Sprint as an Outreach Agency and subcontracted to ISOs such as Wallace Morgan; Credico supplied tablets and some compliance materials and created commission schedules; Sprint supplied SOPs, training modules and program materials and could de-authorize agents from the Assurance campaign.
- Field agents were paid primarily by commission for approved applications, received 1099s while classified as independent contractors, and later (after the relevant period) some were reclassified as employees/exempt.
- Plaintiffs sued under the FLSA and NYLL claiming misclassification (employee v. independent contractor), unpaid minimum wage and overtime, joint-employer liability as to Sprint and Credico, and NYLL wage-notice violations.
- On cross-motions for summary judgment the court assumed arguendo plaintiffs were employees but addressed (1) whether Sprint or Credico were joint employers, (2) whether the outside-sales exemption applied, and (3) left for later briefing the applicability of NYLL wage-notice requirements to outside-sales employees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Joint-employer status for Sprint | Sprint exercised control (SOPs, audits, training, de-authorization) and so is a joint employer | Sprint lacked formal hiring/firing power, did not set pay, did not supervise day-to-day; quality-control role insufficient | Sprint is not a joint employer (no formal or functional control) |
| Joint-employer status for Credico | Credico directed compliance, issued commission schedules and influenced classification/pay, so is a joint employer | Credico did not hire/fire, did not supervise day-to-day, and commission schedules were advisory; Wallace Morgan set pay and managed agents | Credico is not a joint employer (on balance functional and formal factors fail) |
| Outside-sales exemption (FLSA & NYLL) | Field agents were not salespeople because they did not secure binding contracts and services were provided free to qualifying consumers | Field agents solicited applications (effectively selling Sprint’s service entitlement), worked away from office, and were commission-incentivized | Outside-sales exemption applies; field agents are exempt from minimum-wage and overtime claims |
| NYLL wage-notice claims against Wallace Morgan | Wage-notice claims arise regardless of exempt status | Defendants implied exemption might affect notice obligations; parties did not fully brief the point | Court left open whether §§195(1) and (3) apply to employees covered by the outside-sales exemption and ordered limited supplemental briefing by plaintiffs and Wallace Morgan |
Key Cases Cited
- Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (Sup. Ct.) (FLSA employer definition is broad; focus on economic reality)
- Zheng v. Liberty Apparel Co., Inc., 355 F.3d 61 (2d Cir.) (functional joint-employer factors for subcontracting relationships)
- Barfield v. New York City Health & Hospitals Corp., 537 F.3d 132 (2d Cir.) (formal-control factors and joint-employer analysis)
- Jean-Louis v. Metro. Cable Communications, Inc., 838 F. Supp. 2d 111 (S.D.N.Y.) (similar subcontracting facts; client not a joint employer as a matter of law)
- Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (Sup. Ct.) (sales exemption covers solicitation of commitments that are industry-equivalent to sales)