Harris v. Medical Transportation Management, Inc. ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________________
)
ISAAC HARRIS, et al., )
)
Plaintiffs, )
)
v. ) Case No. 17-cv-01371 (APM)
)
MEDICAL TRANSPORTATION )
MANAGEMENT, INC., )
)
Defendant. )
_________________________________________ )
MEMORANDUM OPINION AND ORDER
This case concerns drivers who claim that they have not been paid in accordance with
federal and local wage laws for transporting Medicaid patients in the District of Columbia.
Defendant Medical Transportation Management, Inc., is a private company that contracts with the
District of Columbia to “manage and administer” non-emergency transportation services for
Medicaid recipients. Defendant does not itself supply these transportation services; rather, it
contracts with various companies that own vehicles and employ drivers for that purpose.
Defendant considers itself a “broker” of transportation services.
Plaintiffs Isaac Harris, Darnell Frye, and Leo Franklin work as drivers for companies that
contract with Defendant to provide transportation services. They bring this class action to recover
wages that they allege their employers have not paid them and similarly situated drivers. Plaintiffs
contend that, even though Defendant is not their “employer” in the ordinary sense of that word,
Defendant is legally liable for their unpaid wages as a “joint employer” or “general contractor”
under federal and local laws. Plaintiffs’ claims arise under four federal and District of Columbia
wage statutes: (1) the Fair Labor Standards Act, (2) the D.C. Minimum Wage Act, (3) the
D.C. Living Wage Act, and (4) the D.C. Wage Payment and Collection Law. Plaintiffs also
advance a common law breach-of-contract claim on the theory that they are third-party
beneficiaries of the contract between Defendant and the District of Columbia, which requires
Defendant and transportation companies to pay no less than the current living wage.
Defendant seeks dismissal of Plaintiffs’ claims in their entirety. In its Motion to Dismiss,
Defendant argues that: (1) it cannot be held liable for the alleged wage violations because it is
neither a “joint employer” nor “general contractor” under the relevant wage laws; (2) Plaintiffs’
line of work is exempted from the D.C. Living Wage Act; and (3) Plaintiffs are not third-party
beneficiaries of the contract between Defendant and the District of Columbia and, therefore, do
not have standing to enforce it.
For the reasons that follow, Defendant’s Motion to Dismiss is granted as to the breach of
contract claim, but denied as to the federal and District of Columbia wage claims.
I. BACKGROUND
A. Factual Background
Federal Medicaid regulations provide that a state Medicaid plan must: “(a) [s]pecify that
the [state] Medicaid agency will ensure necessary transportation for beneficiaries to and from
providers; and (b) [d]escribe the methods that the agency will use to meet this requirement.”
42 C.F.R. § 431.53. Under its Medicaid State Plan, the District of Columbia uses both public and
private transportation options to ensure that benefits recipients are able to get to and from
providers. Depending on the circumstances, recipients may receive bus tokens, Metro fare cards,
taxicab vouchers, medi-van or other van transportation, or non-emergency ambulance services to
meet their transportation needs. 1
1
D.C. Medicaid State Plan, Section 3.1(c)(1) & Attachment 3.1D (available at https://dhcf.dc.gov/page/medicaid-
state-plan).
2
The District of Columbia does not deliver transportation services directly to Medicaid
patients. Rather, it uses a “transportation broker system” to “effectively and efficiently administer
[non-emergency transportation] services.” See generally Def.’s Motion to Dismiss, ECF No. 10,
Ex. 2, ECF No. 10-2 [hereinafter “Contract”], ¶ C.4.3.3.; see also Compl., ECF No. 1, ¶¶ 22–24.
To that end, the District of Columbia has contracted with Defendant Medical Transportation
Management, Inc., to “manage and administer” the District’s transportation broker system.
Contract ¶ C.5. The District first contracted with Defendant around 2007, and during the last
decade the parties have entered into new agreements or extensions multiple times. See Compl.
¶¶ 22–24. The most recent contract—a three-year, $85 million contract—took effect in December
2015. See id. at 24; see generally Contract. The court refers to this most recent contract when
referencing the agreement’s terms.
Per the agreement, Defendant is required to serve as the “Gatekeeper of transportation
service requests” from Medicaid recipients. Contract ¶ C.1(c). Defendant is required to create
and operate a call center to receive and process patients’ transportation requests. Id. ¶ C.1(b).
Defendant must validate a recipient’s eligibility and assess the medical necessity of the requested
transportation, id., and upon doing so, determine the “most Appropriate Mode of Transportation,”
which may include public transportation, id. ¶ C.1(d). Additionally, Defendant must establish “a
Comprehensive Transportation Network offering [a] number and variety of transportation
providers to meet the needs of Recipients.” Id. ¶ C.1(a). This includes contracting with privately-
owned transportation companies of the kind that employ Plaintiffs in this case. See Compl. ¶¶ 18–
19, 26. The Contract specifically bars Defendant from “own[ing] or operat[ing] any vehicle to be
used for transport with the NET program,” Contract ¶ C.5.1.5; see also Compl. ¶¶ 25, and federal
regulations are to the same effect, 42 C.F.R. § 440.170(a)(4)(ii)(A).
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Plaintiffs Isaac Harris, Darnell Frye, and Leo Franklin are current or former drivers for
companies that provide non-emergency medical transportation services to Medicaid patients in the
District of Columbia. Compl. ¶¶ 1, 21; see id. ¶¶ 49, 62, 67, 78, 89. All of their employers have
agreements with Defendant to provide such services. Id. ¶ 22; see also id. ¶¶ 18, 26–28. According
to Plaintiffs, although Defendant is not their direct employer, Defendant controls their “daily
operations.” Id. ¶ 27. Specifically, they allege that Defendant has the authority to exercise control
over the transportation provider in various ways, “including hiring and firing [of providers’
employees], the terms and conditions of employment and employees’ daily responsibilities,
payment of wages, and record retention relating to the employees.” Id. Defendant’s alleged
control manifests itself in a multitude of ways. For example, Defendant “required” Plaintiffs to
pass background checks and drug tests as a prerequisite to being hired as drivers. Id. ¶¶ 50, 68,
79; see also id. ¶ 34(c). Defendant also sets minimum qualifications for drivers, including that
they must be at least 21 years old, speak English, and be physically capable of assisting patients.
Id. ¶ 34(c). Once hired, Plaintiffs and all other drivers were required to complete a training
administered by Defendant and held at its offices. Id. ¶¶ 51, 69, 80; see also id. ¶ 34(b). Some
Plaintiffs even had to complete retraining during their employment in order to retain their
positions. See, e.g., id. ¶¶ 69, 80. Defendant also requires providers to share copies of drivers’
personnel records, and Defendant, in turn, maintains its own personnel files containing drivers’
records. See id. ¶ 38. In addition, Defendant requires the transportation providers to ensure drivers
are both insured and that Defendant is listed as an “Additional Insured” on their policies. Id. ¶ 37.
Defendant also imposes upon drivers standards of conduct. See id. ¶ 82.
The Contract also contains a wage provision. It requires Defendant to “comply with the
most recent and future revisions of all federal and District of Columbia laws,” and names the
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D.C. Living Wage Act as one of the laws by which Defendant must abide. Id. ¶¶ 39–40; see also
Contract ¶¶ C.2, H.8.1, H.8.7–H.8.9.
Plaintiffs allege that they have not been compensated consistent with federal and state wage
laws. In all of their driving positions—collectively, they have worked for four different
transportation companies—each Plaintiff worked 40-plus hour work-weeks for a fixed rate,
regardless of the number of hours he worked. E.g. Id. ¶ 54–56 (alleging that Harris’s “effective
hourly wage” was approximately $7.12); id. ¶ 72–74 (alleging that Frye’s “effective hourly wage”
was about $4.79); id. ¶¶ 88–90 (alleging that Franklin’s “effective hourly wage” ranged between
$5 and $8.18 when working for one transportation provider, and between $3.61 to $8.63 when
driving for another company). Plaintiffs did not receive time-and-a-half for their overtime hours.
E.g., id. ¶¶ 55, 57 (alleging that Harris was paid a $463 a week by Star Transportation, even though
he regularly worked 65-hour work weeks); id. ¶¶ 63–64 (alleging that Harris received a “flat rate
of $1200.33 biweekly” for weeks in which he worked more than 40 hours while driving for a
transportation provider); id. ¶¶ 72–75 (alleging Plaintiff Frye received $350 a week while driving
for a transportation provider, despite working an average of 73 hours a week); id. ¶¶ 85–87, 90
(alleging that Franklin was paid between $325 to $475 a week while working for a transportation
provider, even though he worked between 55 and 90 hours a week). As a result, Plaintiffs claim
they, and other similarly situated drivers, were grossly underpaid.
B. Procedural History
On July 13, 2017, Plaintiffs filed a five-count class action against Defendant. See generally
Compl. In Count One, they allege that Defendant violated the Fair Labor Standards Act, 29 U.S.C.
§ 201 et seq., by failing to pay Plaintiffs the minimum wage and overtime rates required by the
law. Compl. ¶¶ 124–32. Counts Two, Three, and Four respectively allege that Defendant violated
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the D.C. Minimum Wage Act, D.C. Code § 32-1001 et seq.; the D.C. Living Wage Act, D.C. § 2-
220.01 et seq.; and the D.C. Wage Payment and Collection Law, D.C. Code § 32-1301 et seq.
Compl. ¶¶ 133–162. Finally, Count Five alleges that Defendant breached its contract with the
District of Columbia by violating the Living Wage Act. Id. ¶¶ 163–69.
Defendant responded with a Motion to Dismiss on August 31, 2017. See generally Def.’s
Mot. to Dismiss, ECF No. 10 [hereinafter Def.’s Mot.]. The court held argument on Defendant’s
Motion on January 22, 2018.
II. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of a complaint. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). “To survive
a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when “the
plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. The factual allegations in the complaint need
not be “detailed”; however, the Federal Rules demand more than “an unadorned, the-defendant-
unlawfully-harmed-me accusation.” Id.In evaluating a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the court must accept a plaintiff’s factual allegations as true and “construe the
complaint ‘in favor of the plaintiff, who must be granted the benefit of all inferences that can be
derived from the facts alleged.’” Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012)
(quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979)). The court need not accept
as true either “a legal conclusion couched as a factual allegation,” Papasan v. Allain, 478 U.S.
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265, 286 (1986), or “inferences . . . unsupported by the facts set out in the complaint,” Kowal v.
MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). If the facts as alleged fail to establish
that a plaintiff has stated a claim upon which relief can be granted, then a court must grant the
defendant’s Rule 12(b)(6) motion. See Am. Chemistry Council, Inc. v. U.S. Dep’t of Health &
Human Servs., 922 F. Supp. 2d 56, 61 (D.D.C. 2013).
III. DISCUSSION
A. Fair Labor Standards Act Count
There is no allegation in this case that any Plaintiff was employed directly by Defendant.
Rather, Plaintiffs’ contention is that, under the Fair Labor Standards Act (“FLSA”), Defendant is
a “joint employer” equally responsible for the payment of legally compliant wages. Defendant
argues that Plaintiffs have not alleged facts that could support the plausible inference that it—
along with the transportation providers—jointly employed Plaintiffs. See Def.’s Mot. at 9–16.
It advances two primary arguments. First, Defendant asserts that, to the extent Defendant imposes
requirements on the hiring of drivers, including background checks and qualification requirements,
those are mere “quality control” or “minimum qualification” standards that do not legally rise to
employer-level control. Id. at 11–14. Indeed, Defendant states that many of Plaintiffs’ allegations
concerning its involvement in their work “are not imposed by [Defendant] MTM, but are in fact
required by the District of Columbia as reflected in the Contract [between Defendant and the
District].” Id. at 11. Second, Defendant maintains that Plaintiffs critically fail to allege facts
showing that Defendant has any control over setting Plaintiffs’ work schedules and their rates of
pay. See id. at 12–15. The absence of such facts, Defendant claims, is “inconsistent with the
existence of an employer-employee relationship between the Plaintiffs and [Defendant].” Id. at
16. Plaintiffs counter that Defendant is taking an “unduly narrow interpretation” of the term “joint
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employer,” and that, under a correct reading, they have alleged facts that are sufficient to establish
a joint employer relationship. See Pls.’ Mem. in Opp’n to Def.’s Mot. to Dismiss, ECF No. 13
[hereinafter Pl.’s Opp’n], at 1, 7–22.
The FLSA conditions liability on the existence of an employer-employee relationship.
See 29 U.S.C. § 206(a). The Act’s definition of “employer” is expansive, as it “includes any
person acting directly or indirectly in the interest of an employer in relation to an employee. Id.§ 203(d); Falk v. Brennan, 414 U.S. 190, 195 (1973) (noting the “expansiveness of the FLSA’s
definition of ‘employer’”). An entity “employs” an individual if it “suffer[s] or permit[s]” the
individual to work.” 29 U.S.C. § 203(g). To that end, an employee may be employed by more
than one employer. The Act’s regulations make this clear:
A single individual may stand in the relation of an employee to two
or more employers at the same time under the Fair Labor Standards
Act of 1938, since there is nothing in the act which prevents an
individual employed by one employer from also entering into an
employment relationship with a different employer. A determination
of whether the employment by the employers is to be considered
joint employment or separate and distinct employment for purposes
of the act depends upon all the facts in the particular case.
29 C.F.R. § 791.2(a). In such “joint employment” situations, all employers “are responsible, both
individually and jointly, for compliance” with the FLSA. See id.The D.C. Circuit has not specified a test for determining whether an alleged employer is a
“joint employer” for purposes of the FLSA. It has, however, articulated pertinent principles in the
related context of deciding whether a person claiming to be a “consultant” is in fact an “employee”
for purposes of the FLSA. See Morrison v. Int’l Programs Consortium, Inc., 253 F.3d 5, 10–11
(D.C. Cir. 2001); see also Pls.’ Opp’n at 7; cf. Def.’s Reply Br., ECF No. 16 [hereinafter Def.’s
Reply], at 2. Interpreting the Supreme Court’s decision in Goldberg v. Whitaker House Co-op.,
Inc., the D.C. Circuit held in Morrison that whether an employer-employee relationship exists for
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FLSA purposes turns on the “economic reality” of the employment arrangement rather than
“technical concepts.” 253 F.3d at 11 (citing Goldberg, 366 U.S. 28, 32–33 (1961)). “The ‘test
considers the extent to which typical employer prerogatives govern the relationship between the
putative employer and employee.’” Id. (citing Henthorn v. Dep’t of Navy, 29 F.3d 682, 684 (D.C.
Cir. 1994)). The D.C. Circuit identified four “typical employer prerogatives” for consideration:
(1) the power to hire and fire employees; (2) the ability to supervise and control employees’ work
schedules or conditions of employment; (3) the authority to determine the rate and method of
payment; and (4) the maintenance of employment records. See id. Additionally, the court cited a
Second Circuit decision, Brock v. Superior Care, Inc., that looked at “a different, although similar,
set of [five] factors.” Id. (citing Brock, 840 F.2d 1054, 1058–59 (2d Cir. 1988)). Ultimately, the
court in Morrison noted that an employee’s degree of “dependence” indicates her status, i.e.,
whether the factors establish that the personnel are so dependent upon the business with which
they are connected that they come within the protection of the FLSA. See id. (citing Usery v.
Pilgrim Equip. Co., 527 F.2d 1308, 1311–12 (5th Cir. 1976)).
The parties here place little emphasis on Morrison, presumably because it does not present
the question of “joint employment,” as opposed to mere “employment.” Instead, they suggest that
the court look outside the Circuit for guidance. Accepting that invitation takes the court through
the looking glass into a dizzying world of multi-factor tests that attempt to distill the concept of
“joint employment.” See Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 135 (4th Cir. 2017)
(observing that courts have “had difficulty developing a coherent test distinguishing ‘separate
employment’ from ‘joint employment”). A brief tour of the circuits illustrates the point.
The court starts with the circuit using the most factors, the Ninth Circuit. In Bonnette v.
Cal. Health & Welfare Agency, the court began moderately and identified only four key factors.
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See Bonnette, 704 F.2d 1465, 1407 (9th Cir. 1983); see also Ivanov v. Sunset Pools Mgmt. Inc.,
567 F. Supp. 2d 189, 194–95 (D.D.C. 2008) (relying on Bonnette). The Bonnette test calls for an
examination of “whether the alleged employer (1) had the power to hire and fire the employees,
(2) supervised and controlled employee work schedules or conditions of employment,
(3) determined the rate and method of payment, and (4) maintained employment records.”
Bonnette, 704 F.2d at 1470; see also In re Enter. Rent-a-Car Wage & Emp’t Practices Litig., 683
F.3d 462, 469 (3d Cir. 2012) (adopting Bonnette’s four-factor test, but emphasizing that those
factors are not necessarily exhaustive). Those are the same four factors identified by the D.C.
Circuit in Morrison. Not content with only four factors, however, the Ninth Circuit later upped
the ante and added nine more factors, for a total of 13 for consideration. See Moreau v. Air France,
356 F.3d 942, 947–48 (9th Cir. 2004); Torres-Lopez v. May, 111 F.3d 633, 639–40 (9th Cir. 1997).
The court need not list all of them here.
The Eleventh Circuit keeps things simpler, relatively speaking. It considers eight factors:
(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 and methods of payment; (4) the right, directly
or indirectly, to hire, fire, or modify employment conditions; (5) preparation of payroll and
payment of wages; (6) ownership of the facilities where the work occurs; (7) performance of a
specialty job integral to the business; and (8) investment in equipment and facilities. See Layton
v. DHL Exp. (USA), Inc., 686 F.3d 1172, 1176–78 (11th Cir. 2012). The Eleventh Circuit adds to
these eight factors five guiding principles, which emphasize that the core question of joint
employment concerns the existence of “economic dependency.” Id.The Second Circuit directs its trial courts to consider two fewer criteria than the Eleventh
Circuit, for a total of six. See Zheng v. Liberty Apparel Co., 355 F.3d 61, 72 (2d Cir. 2003). Those
10
factors include: (1) whether the putative joint employer’s premises and equipment were used for
the plaintiff’s work; (2) whether the plaintiff’s actual employer could shift workers from one
putative joint employer to another; (3) the extent to which the plaintiff performs a “discrete line-
job that [is] integral” to the putative joint employer’s process of production; (4) whether
responsibility under the relevant contracts could pass from one subcontractor to another without
material change; (5) the degree of supervision exercised by the putative joint employer; and
(6) whether the plaintiff worked exclusively or predominantly for the putative joint employer. See
id. at 72. But these six factors are not exclusive; the Second Circuit has stated that a court also is
“free to consider any other factors it deems relevant to its assessment of the economic realities.”
Id. at 71–72.
Most recently, the Fourth Circuit developed its own, six-factor, test. In Salinas v.
Commercial Interiors, Inc., the court held that courts should consider: (1) “[w]hether, formally or
as a matter of practice, the putative joint employers jointly determine, share, or allocate the power
to direct, control, or supervise the worker, whether by direct or indirect means”; (2) “[w]hether,
formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate
the power to—directly or indirectly—hire or fire the worker or modify the terms or conditions of
the worker’s employment”; (3) “[t]he degree of permanency and duration of the relationship
between the putative joint employers”; (4) “[w]hether, through shared management or a direct or
indirect ownership interest, one putative joint employer controls, is controlled by, or is under
common control with the other putative joint employer”; (5) “[w]hether the work is performed on
a premises owned or controlled by one or more of the putative joint employers, independently or
in connection with one another”; and (6) “[w]hether, formally or as a matter of practice, the
putative joint employers jointly determine, share, or allocate responsibilities over functions
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ordinarily carried out by an employer, such as handling payroll; providing workers’ compensation
insurance; paying payroll taxes; or providing the facilities, equipment, tools, or materials necessary
to complete the work.” 848 F.3d 125, 141–42 (4th Cir. 2017). In focusing on these criteria, the
Fourth Circuit distinguished its approach from the four-factor approach in Bonnette, criticizing
that approach for adhering to “common law agency” principles to determine joint employment
status. See id. at 142. Its new test, the Fourth Circuit explained, was better suited to the task
because its inquiry focuses on the relevant relationship between the putative joint employers, as
set forth in the Department of Labor’s FLSA “joint employment” regulation. See id. at 142 (citing
29 C.F.R. § 791.2 2).
Other circuits employ fewer factors. See, e.g., Johnson v. Unified Gov’t of Wyandotte
Cty./Kansas City, Kansas, 371 F.3d 723, 729 (10th Cir. 2004) (focusing on “(1) the degree of
control exerted by the alleged employer over the worker; (2) the worker’s opportunity for profit or
loss; (3) the worker’s investment in the business; (4) the permanence of the working relationship;
and (5) the degree of skill required to perform the work”). And, the Seventh Circuit has simply
said that “[t]he joint-employment analysis turns—as does any assessment of a putative
employment relationship—on the totality of the circumstances, with a particular focus on the
control exercised by the alleged employer over a person’s working conditions.” Bridge v. New
2
29 C.F.R. § 791.2(b) provides:
Where the employee performs work which simultaneously benefits two or more
employers, or works for two or more employers at different times during the
workweek, a joint employment relationship generally will be considered to exist
in situations such as:
(1) Where there is an arrangement between the employers to share the employee's
services, as, for example, to interchange employees; or
(2) Where one employer is acting directly or indirectly in the interest of the other
employer (or employers) in relation to the employee; or
(3) Where the employers are not completely disassociated with respect to the
employment of a particular employee and may be deemed to share control of the
employee, directly or indirectly, by reason of the fact that one employer controls,
is controlled by, or is under common control with the other employer.
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Holland Logansport, Inc., 815 F.3d 356, 363 (7th Cir. 2016); see also Moldenhauer v. Tazewell-
Pekin Consol. Commc’ns Ctr., 536 F.3d 640, 644 (7th Cir. 2008) (acknowledging the four
Bonnette factors are relevant but declining to adopt them as the “only relevant factors, or even the
most important”).
In this case, the parties espouse different tests. Plaintiffs urge the court to use the factors
articulated in the Fourth Circuit’s decision in Salinas, Pls.’ Opp’n at 7–22, whereas Defendant
relies on the four Bonnette factors, Def.’s Mot. at 10. Plaintiffs also assert that, even if the court
were to apply the Bonnette factors, their FLSA claim survives the motion to dismiss. Pls.’ Opp’n
at 4, 19–22.
At this early stage of the litigation, the court declines to choose a test or conduct a factor-
by-factor analysis. That is because “the ultimate determination” of whether an entity is a joint
employer “must be based ‘upon the circumstances of the whole activity.’” Johnson v. Serenity
Transp., Inc., 141 F. Supp. 3d 974, 990 (N.D. Cal. 2015) (quoting Rutherford Food Corp., 331
U.S. at 730). Put another way, the question of joint employer status is “essentially a fact issue.”
Boire v. Greyhound Corp., 376 U.S. 473, 481 (1964) (stating that the question of joint employment
before the National Labor Relations Board, for purpose of defining the bargaining unit, is
“essentially a fact issue”). Therefore, defeating a claim of joint employment at the motion to
dismiss stage is no easy task. See Kaiser v. Trofholz Tech., Inc., 935 F. Supp. 2d 1286, 1293 (M.D.
Ala. 2013) (holding that the determination of joint employment is best addressed “after the parties
have had an opportunity to uncover facts through discovery to support or refute this claim”). The
very cases cited in the parties’ briefings make the point, as most are decisions made at the summary
judgment stage. See Def.’s Mot. at 2–13; Pl.’s Opp’n at 5–22; Def.’s Reply at 2–13. In the rare
instances where courts have dismissed an FLSA claim premised on joint employment on a Rule
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12(b)(6) motion to dismiss, they do so when the plaintiff failed to allege any facts that would
support the inference that the defendant had any control over the employment relationship. See,
e.g., Al-Quraan v. 4115 8th St. NW, LLC, 113 F. Supp. 3d 367, 370 (D.D.C. 2015) (rejecting
assertion of employer or joint employer status where there were “no allegations that [the defendant]
had any involvement in managing employee work schedules or conditions of employment,
maintained any employment records, or had the power to hire and fire Plaintiff or any other
employees”); Attanasio v. Comm. Health Sys., Inc., 863 F. Supp. 2d 417, 425–26 (M.D. Pa. 2012)
(dismissing FLSA claim because the plaintiffs had not provided facts that would raise the
plaintiff’s claim of defendant’s status as a joint employer “above a speculative level” because
pleadings lacked “operative details” regarding the defendant’s alleged authority over and
supervision of the plaintiffs).
But here, Plaintiffs’ claim of joint employment is neither conclusory nor lacking in
“operative details.” Plaintiffs allege an array of facts concerning Defendant’s involvement in their
work, all of which the court accepts as true at this stage of the litigation. See Hettinga, 677 F.3d
at 476. Specifically, they charge that Defendant directed and controlled how they conducted their
work by imposing “transportation standards,” “client protocols and procedures,” “dispute resolution
procedures,” “accident/investigation procedures,” and other regulations contained in Defendant’s
“Transportation Provider Handbook.” Compl. ¶ 28. And there is more. Defendant required drivers’
vehicles to be inspected daily, and it reserved the right to take out of service any vehicles that did
not meet its standards. Id. ¶¶ 36, 82. As for work schedules, Plaintiffs allege Defendant indirectly
controlled them by dictating which trips were assigned to which transportation providers within its
network and by requiring those providers to complete all trips assigned to it. See id. ¶ 31. Finally,
the Complaint contains multiple allegations that Defendant possesses both hiring and firing power,
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including the right to prohibit providers from using drivers who have not been “fully credentialed
and approved” by Defendant, to mandate drivers “complete and pass” Defendant’s training, to
require drivers possess certain minimum qualifications, and to disapprove of the hiring of, or
suspend, any driver for good cause at Defendant’s discretion. Id. ¶¶ 34(a)–(d). These allegations,
individually and collectively, belie Defendant’s position that Plaintiffs’ “allegations as to
[Defendant’s] control over their work . . . relate entirely to matters of quality control” and minimum
qualifications. See Def.’s Mot. at 11, 13; cf. Salinas, 848 F.3d at 148 (stating that “an entity does
not become a joint employer by engaging in the oversight necessary to ensure that a contractor’s
services meet contractual standards of quality and timeliness”). Rather, Plaintiffs have alleged
Defendant exercised sufficient control over their work at all stages of their employment, from hiring,
to performance, to termination, to qualify as a joint employer.
The Contract, which Defendant introduced with its Motion to Dismiss, only bolsters
Plaintiffs’ allegations of control. For example, the Contract requires Defendant to ensure that
drivers: wear “company-authorized uniforms . . . worn in an approved manner,” Contract
¶ C.5.2.3.3.4(f); wear and present a visible company I.D. badge, id. ¶ C.5.2.3.3.5(e), (j); refrain
from smoking, eating or consuming beverages while driving, id. ¶ C.5.2.3.3.5(f); and act in a
“courteous, patient, and helpful” manner to all passengers, id. ¶ C.5.2.3.3.4(a). Additionally, under
the Contract, Defendant must ensure conformance to vehicle appearance standards. So, for
example, a driver’s photograph must appear “on the interior sidewall” of the vehicle, in view of
the passenger; certain signage must be displayed on the interior and exterior; and the interior must
meet cleanliness requirements. Id. ¶¶ C.5.2.3.2.5(z)–(dd); C.5.2.3.3.5(s). Moreover, Defendant
requires all customer complaints and passenger violations of rules be reported to Defendant.
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Compl. ¶ 35(b), (c). The Contract, in short, sets forth a host of conditions of employment that, at
the motion to dismiss stage, gives rise to the plausible inference that Defendant is a joint employer.
Defendant takes a different view of the Contract’s legal significance. It contends that, under
the Contract, it is no more than a transportation “broker” and, in that capacity, merely implements
and enforces standards set by the District of Columbia in that Contract. Therefore, Defendant argues,
it cannot be held liable as a joint employer. See Def.’s Mot. at 11. The court rejects this contention
for two reasons. First, the court cannot conclude, as a factual matter, based on no more than the
Complaint and the Contract, that Defendant controls Plaintiffs only insofar as required by the
Contract. Discovery may show evidence of control beyond the requirements of the Contract.
Second, Defendant’s implementation and enforcement of the District’s contractually-imposed
standards does not necessarily absolve it of liability under the FLSA. Congress intentionally drew
the definition of “employer” under the FLSA to have a broad sweep. See United States v.
Rosenwasser, 323 U.S. 360, 362–63 (1945). In fact, “[t]his definition derived from state child-labor
laws, which imposed liability not only on businesses that directly employed children but also on
‘businesses that used middlemen to illegally hire and supervise children.’” Salinas, 848 F.3d at 133
(quoting Antenor v. D & S Farms, Inc., 88 F.3d 925, 929 n.5 (11th Cir. 1996)). The court does not
reference this bit of legislative history to suggest that Defendant is the equivalent of such middlemen;
they surely do not compare. Rather, the court does so to emphasize that Defendant’s claimed
position as a mere “broker” of transportation services does not necessarily establish that it falls
outside the “remedial and humanitarian” purposes of the FLSA, which the Supreme Court has
instructed “must not be interpreted or applied in a narrow, grudging manner.” Tenn. Coal, Iron &
R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597 (1944). Therefore, without controlling
16
precedent that categorically excludes businesses in Defendant’s position from joint employer
liability, summary judgment is the proper stage at which to resolve Defendant’s status.
Defendant’s attempt to liken this case to a case from this District Court, Ivanov v. Sunset
Pools Management, also is unavailing. See Def.’s Reply at 3–4; Hr’g Tr., 1/22/2018, at 5–6, 10.
The plaintiffs in Ivanov were foreign citizens who were recruited by an international staffing firm to
work in the United States for a company that provided lifeguarding services to entities that operate
pools. 567 F. Supp. 2d. at 190–91. They sought to hold the staffing firm liable for wage violations
under the FLSA under a joint employer theory. See id. at 194–95. The staffing firm had required
the plaintiffs to attend its orientation session and report to it changes in employment and address.
Id. at 194–95. It also kept copies of the plaintiffs’ employment records and assisted them with
their visa, immigration, and health insurance paperwork. Id. at 195. But the court concluded that
the firm’s participation in the plaintiffs’ employment was inadequate to establish an employer-
employee relationship because the firm’s participation was “unrelated to [the plaintiffs’] jobs as
lifeguards” and because the firm merely was complying with “State Department regulations.” Id.
Here, Defendant focuses on the latter rationale, but ignores the former. Unlike in Ivanov,
Defendant’s involvement in Plaintiffs’ employment is alleged to be directly related to their work
as drivers. That factor—in addition to the fact that Ivanov was resolved on summary judgment—
distinguishes this case from Ivanov.
Finally, Defendant insists that the absence of an allegation that Defendant actually set
drivers’ wages is fatal to Plaintiffs’ claim. Not so. The joint employer tests employed by courts
are factor tests, not elements tests, where no factor is outcome-determinative. See Morrison, 253
F.3d at 11; Zheng, 335 F.3d at 69; Salinas, 848 F.3d at 141–42; Bonnette, 704 F.2d at 1469–70.
17
Therefore, the fact that Plaintiffs do not allege that Defendant actually dictated how much they
earned does not preclude a finding that Defendant was their joint employer.
Accordingly, for the reasons explained, Plaintiffs may proceed to discovery on their FLSA
claim.
B. D.C. Minimum Wage Revision Act Count
In Count Two, Plaintiffs allege that Defendant violated the D.C. Minimum Wage Revision
Act by failing to pay them a sufficient hourly wage and a premium overtime wage. Compl. ¶¶ 133–
42. The D.C. Minimum Wage Revision Act sets the minimum wage “to be paid by any employer
in the District of Columbia,” at either the greater of the applicable rate set in the statute or the
minimum wage set under the FLSA, plus $1, whichever is greater. D.C. Code § 32-1003(a). As
with the FLSA, the Act requires employers to pay employees 1.5 times the employee’s normal
hourly wage for work performed in excess of 40 hours in the week. Id. § 32-1003(c). Plaintiffs
argue alternative theories of liability: Defendant is liable for the wage violations either because
Defendant is Plaintiffs’ employer for purposes of the statute or because Plaintiffs are employees
of Defendant’s subcontractors, i.e., the transportation providers.
As to Defendant’s former theory, the parties agree that, if Plaintiffs have stated a claim for
joint employer liability under the FLSA, they also have successfully pleaded a claim under the
D.C. Minimum Wage Revision Act. See Def.’s Mot. at 16–17; Pl.’s Opp’n at 5–7; see also D.C.
Code § 32-1002(1) (defining “employ” as “includ[ing] to suffer or permit to work,” like the
FLSA); Wilson v. Hunam Inn., Inc., 126 F. Supp. 3d 1, 5–6 (D.D.C. 2015) (stating that courts
construe the FLSA and the D.C. Minimum Wage Act “conterminously for purposes of determining
who is liable as an employer”). Thus, having stated a viable claim under the FLSA, Plaintiffs
likewise have stated a cognizable claim under the D.C. Minimum Wage Revision Act.
18
Plaintiffs also have stated a claim under their alternative theory of liability, namely, that
Defendant is liable as a general contractor for the providers’ wage violations. The D.C. Minimum
Wage Revision Act provides that “[a] subcontractor, including any intermediate subcontractor,
and the general contractor shall be jointly and severally liable to the subcontractor’s employees”
for violations of the Act. D.C. Code § 32-1012(c). The statute does not define the terms “general
contractor” or “subcontractor.” Thus, the court construes those terms “in accordance with [their]
ordinary or natural meaning[s].” FDIC v. Meyer, 510 U.S. 471, 476 (1994). The ordinary meaning
of the term “general contractor” is “[s]omeone who contracts for the completion of an entire
project, including purchasing all materials, hiring and paying subcontractors, and coordinating all
the work.” Black’s Law Dictionary (10th ed. 2014). A “subcontractor” is“[s]omeone who is
awarded a portion of an existing contract by a contractor, esp. a general contractor.” Id. A
subcontractor, therefore, agrees to do a portion of the work that the general contractor promises to
deliver to a client.
Here, at the motion to dismiss stage, Defendant and the transportation companies
comfortably fit within the definitions of general contractor and subcontractor, respectively. The
terms of the Contract support this conclusion. Under the heading “General Contractor
Responsibilities,” the Contract provides that Defendant shall, among other things: (1) “provide
NET [non-emergency transportation services] services to Eligible Recipients in the District”;
(2) “ensure that Transportation Services are provided in compliance with the requirements set forth
herein”; (3) “utilize the . . . pool of active NET Transportation Providers currently enrolled in the
District’s Medicaid NET program to select from and develop a provider Network;” and
(4) “provide the oversight and monitoring of the day-to-day operations necessary for the delivery
of NET.” Contract ¶¶ C.5.1.1, C.5.1.2, C.5.1.4. The Contract further requires Defendant to pay
19
network transportation providers with the funds it receives from the District of Columbia under
the Contract. Id. ¶ C.5.1.11(f). Reading these terms in the light most favorable to Plaintiffs,
Defendant agreed with the District of Columbia, not merely to broker non-emergency
transportation services to qualifying Medicaid recipients, but also to “provide” such services. And,
in order to carry out that overarching contractual obligation, Defendant must contract with
companies that own and operate vehicles and employ drivers to transport Medicaid patients. See
id. ¶ C.5.2.a (describing “Transportation Providers” as consisting of, among others, “ambulatory
vans, wheelchair vans, and stretcher van vehicles” and “Drivers and Attendants”). Indeed, because
the Contract expressly prohibits Defendant from directly supplying transportation services, see id.¶ C.5.1.5, companies like those that employ Plaintiffs are essential to Defendant fulfilling its
contractual duty to “provide” transportation services and, thus, plausibly qualify as subcontractors
under the D.C. Minimum Wage Revision Act.
To avoid this conclusion, Defendant asserts that it is not a general contractor relative to the
transportation providers because those companies “perform a function”— the actual transporting
of Medicaid recipients—that is “different than that for which [Defendant] was contracted by the
District, and one which [Defendant] is contractually prohibited from performing.” Def.’s Mot. at
17–18. That argument, however, misses the mark. The fact that Defendant performs a “different”
function than the transportation companies does not disqualify it from being a general contractor.
Indeed, the opposite is often true. In the construction industry, for example, the primary obligation
of a general contractor for a large scale project is to develop a budget for the project and coordinate
the construction schedule, not to do the construction itself. The tasks involved in actually erecting
the building are performed by subcontractors, such as electricians, plumbers, and the like. 3 Thus,
3
See “Subcontractor,” https://legal-dictionary.thefreedictionary.com/Subcontractor.
20
subcontractors routinely do “different” work than general contractors. Second, Defendant
construes its duties under the Contract too narrowly. Its responsibility, broadly speaking, and per
the language of the Contract, is to “provide” non-emergency transportation services, not just broker
them. Contract ¶ C.5.1.2. Thus, while Defendant may not directly transport Medicaid recipients,
the scope of its work can plausibly be read to encompass the purposes for which Plaintiffs’
companies are hired.
Defendant also relies on the Contract’s text to avoid the designation of “general
contractor.” Def.’s Mot., at 18. Specifically, it points to a clause that states: “[T]he Broker shall
not subcontract any portion of the Broker’s requirements contained in this contract.” Contract
¶ C.5.1.5. That clause, Defendant contends, “confirm[s]” the lack of a subcontractor-contractor
relationship between Defendant and the transportation providers. Def.’s Mot. at 18. The
D.C. Minimum Wage Revision Act, however, expressly rejects the notion that a contractual term
can alter a party’s legal status under the statute. The Act states that, unless authorized by law, “no
provision of this chapter shall in any way be contravened or set aside by private agreement.”
D.C. Code § 32-1305(a). Thus, a company’s obligations are fixed by the statute itself and cannot
be altered through the employer-employee contract. Accordingly, Defendant cannot find refuge
in a provision barring subcontracting to avoid general contractor liability.
In sum, then, Plaintiffs have alleged facts that give rise to a plausible inference that
Defendant is a general contractor under the Minimum Wage Act and therefore may be held liable
for Plaintiffs’ employers’ alleged wage law violations.
C. D.C. Living Wage Act Count
The D.C. Living Wage Act requires recipients of government contracts of $100,000 or
more to pay their “affiliated employees” the living wage, which is an hourly rate set by the District
21
of Columbia. D.C. Code § 2-220.03(a). (Likewise, “[a]ll subcontractors of recipients of these
contracts” who receive at least $15,000 in District of Columbia funds must pay their affiliated
employees that rate. Id.) An “affiliated employee” is defined broadly in the Act as “any individual
employed by a [contract] recipient who received compensation directly from government
assistance or a contract with the District of Columbia . . . including any employee of a contractor
or subcontractor of a recipient who performs services pursuant to government assistance or
contract.” Id. § 2-220.02(1). Here, Plaintiffs contend, they qualify as Defendant’s “affiliated
employees” under the Living Wage Act—because they are “employee[s] of a . . . subcontractor of
a recipient”—such that Defendant is responsible for paying them the District of Columbia’s living
wage. Compl. ¶¶ 144–46.
Defendant here does not dispute Plaintiffs’ assertion that Plaintiffs are “affiliated
employees,” as defined under the Living Wage Act. See Def.’s Mot. at 19–20; Def.’s Reply at 15–
16–17. 4 Instead, Defendant seeks dismissal of Plaintiffs’ Living Wage Act claim on the ground
that the work performed by the drivers—transporting Medicaid patients—is exempted under the
Act’s “Medicaid provider” exemption, which states as follows:
The following types of contracts, government assistance, and
employment shall be exempt from the requirement of this
subchapter: . . .
(9) Medicaid provider agreements for direct care services to
Medicaid recipients; provided, that the direct care service is not
provided through a home care agency, a community residence
facility, or a group home for persons with intellectual disabilities, as
those terms are defined in [D.C. Code] § 44-501.
4
The court already has found that Plaintiffs have plausibly alleged that they are “subcontractors,” therefore even if
Defendant did dispute that Plaintiffs qualify as “affiliated employees,” the court would reject that argument for the
reasons previously stated.
22
D.C. Code § 2-220.05(9) (emphasis added). Thus, unless excepted from the requirement, Medicaid
providers of “direct care services” are not subject to the Living Wage Act. Because Plaintiffs drive
Medicaid patients to medically necessary doctors’ appointments, Defendant asserts that they are
covered by the “direct care services” exemption. Def.’s Mot. at 19–20; Def.’s Reply at 16. Plaintiffs
think otherwise. They contend that “direct care services” is a term of art in the healthcare field and
that transportation services do not fall under that definition. Pls.’ Opp’n at 25–26. Thus, while both
parties agree that “direct care services” refers to the rendering of some type of assistance to Medicaid
recipients, the parties dispute what kind of assistance is covered.
In questions of statutory interpretation, courts begin with the language of the statute itself.
Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). If the term has a
“plain and unambiguous meaning,” the court’s inquiry ends. See Robinson v. Shell Oil Co., 519 U.S.
337, 340 (1997). Whether statutory language is “plain” depends on “the language itself, the specific
context in which that language is used, and the broader context of the statute as a whole.” Id. Here,
the statute itself leaves no breadcrumbs by which the court might trace the D.C. Council’s path. The
Living Wage Act does not define the term “direct care services;” nor does D.C. Code § 44-501,
which is the provision cross-referenced in the exemption. Other sources likewise are unhelpful. The
District of Columbia regulations concerning the exemptions provide no guidance. See D.C. Mun.
Regs. tit. 7, § 1007(i). And the statute’s legislative history is silent on the meaning of “direct care
services.” See D.C. Council, Comm. on Gov’t. Operations, Report on Bill 16-286 (D.C. 2005).
In the absence of a statutory definition, the parties here rely on two competing canons of
statutory construction. Defendant’s argument rests on the canon that, absent an express definition,
courts normally interpret undefined words “as taking their ordinary, contemporary, common
meaning.” Sandifer v. U.S. Steel Corp., 134 S. Ct. 870, 876 (2014) (quoting Perrin v. United States,
23
444 U.S. 37, 42 (1979)). To that end, Defendant hones in on the word “care.” It argues that, because
transportation companies provide Medicaid patients with a mode of “access[ing] . . . medical care,”
they are rendering “care” under the Contract. Def.’s Mot. at 19–20 (quoting the Contract). “Care”
is defined in dictionaries as including: (1) “charge, supervision,” Merriam-Webster Dictionary,
www.merriam-webster.com/dictionary/care; (2) “[a]ttentive assistance or treatment to those in
need,” American Heritage Dictionary, www.ahdictionary.com/word/search.html?q=care; and
(3) “[c]harge; oversight with a view to protection, preservation, or guidance,” Oxford English
Dictionary (2d ed. 1989), http://www.oed.com/view/Entry/27899. The provision of non-emergency
medical transportation services, as Defendant contends, comports with these definitions of “care.”
Plaintiffs, on the other hand, ask the court to look to a different canon of construction,
namely, when statutes use “technical words or terms of art,” “it (is) proper to explain them by
reference to the art or science” that they concern. Corning Glass Works v. Brennan, 417 U.S. 188,
201 (1974); accord La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 372 (1986). Plaintiffs place
emphasis on the full phrase “direct care services,” which, they contend, has a distinct meaning within
the healthcare field. See Pls.’ Opp’n at 25–26 (citing sources). For support, Plaintiffs cite a 2008
publication from the Institute on Medicine that defines “direct care” workers to mean “nurse aides,
home health aides, and personal- and home-care aides.” Institute on Medicine Committee on the
Future Health Care Workforce for Older Americans, Retooling for an Aging America: Building the
Health Care Workforce 199 (2008), available at https://www.ncbi.nlm.nih.gov/books/NBK215393/.
Plaintiffs also point to federal law, Pl.’s Opp’n at 25 (citing the Public Health Service Act, 42 U.S.C.
§ 201 et seq.), which defines “direct care worker” as the “meaning given that term in the 2010
Standard Occupational Classifications of the Department of Labor for Home Health Aides [31-
1011], Psychiatric Aides [31-1013], Nursing Assistants [31-1014], and Personal Care Aides [39-
24
9021],” 42 U.S.C. § 295p(16). Those terms’ meanings focus on the general provision of medical
and daily living supports. See Bureau of Labor Statistics, Standard Occupational Classification
2010, available at https://www.bls.gov/soc/2010/home.htm. None of those positions primarily
involve transporting a person to and from medical appointments.
The court thinks Plaintiffs have the better of the argument. “Ultimately, context determines
meaning.” Johnson v. United States, 559 U.S. 133, 139 (2010). And so, the court looks to the term’s
use in the overall statutory scheme. The pertinent statutory text exempts “Medicaid provider
agreements for direct care services to Medicaid recipients . . . [unless] provided through a home
care agency, a community residence facility, or a group home for persons with intellectual
disabilities.” D.C. Code § 2-220.05(9). In other words, all providers of Medicaid-covered “direct
care services” are exempt from the Living Wage Act, except when delivered through one of the three
enumerated modes. To define those modes, the Medicare provider exemption expressly cross-
references and adopts the definitions of those terms as set forth in the Health-Care and Community
Residence Facility, Hospice, and Home Care Licensure Act, D.C. Code § 44-501. As defined in that
Act, “Home care agency” means an entity, other than a hospice, that “directly provides skilled
nursing services and at least one other therapeutic service to an individual.” D.C. Code § 44-501(7).
Similarly, the definitions of “community residence facility” and “group home for persons with
intellectual disabilities” refer to “a sheltered living environment for individuals who desire or need
such an environment because of their physical, mental, familial, social, or other circumstances.” Id.§ 44-501(4); id. § 44-501(5) (incorporating the term “community residence facility”). Thus, all three
defined terms focus on the provision of medical care or daily living assistance in a residential setting.
So, when the term “direct care services” is read alongside the definitions of the excepted modes of
such service, the definitional intent of the City Council becomes more apparent: “direct care
25
services” must be understood as relating to medical or therapeutic services or services that support
daily living in a residential setting. Read in that manner, the term does not include a business whose
sole purpose is to transport Medicaid recipients to and from medical appointments.
Other relevant sources support this reading. The District of Columbia’s Health and Mental
Health regulations routinely uses the term “direct care” in the context of rendering of health services
by medical professionals. See, e.g., D.C. Mun. Regs. tit. 22-B, § 3911.2(h) (requiring clinical records
for patients in home care agencies to contain “[c]linical, progress, and summary notes, and activity
records, signed as dated as appropriate by professional and direct care staff”); id. § 3510.6
(mandating when employees at group homes for persons with intellectual disabilities for whom
“direct care certification is available” must pass evaluations); id. § 3511 (setting “minimum daily
ratio of on-duty, direct cares staff to residents” in group homes for persons with intellectual
disabilities); D.C. Mun. Regs. tit. 22-A, § 599 (defining “staff” in a Department of Mental Health
regulation as “individuals with responsibility for managing a person’s health care or participating in
an emergency, and who are employed by the [mental health] provider . . . including . . . physicians,
nurses, orderlies, resident physicians, interns, and direct care workers”). None of the above uses of
“direct care” can reasonably be read to encompass transportation services.
Federal FLSA regulations point in the same direction. In 2013, the Department of Labor
revised its rules to bring more workers under the FLSA’s protections. See Application of the Fair
Labor Standards Act to Domestic Service, 78 Fed. Reg. 60,454, 60,455–56 (Oct. 1, 2013). 5 In
adopting those amendments, the Department of Labor traced the history of its “companionship
5
The court acknowledges that the regulatory action discussed in this paragraph post-dates the District of Columbia’s
adoption of the Medicaid direct care services exemption. See Way to Work Amendment Act of 2006, D.C. Law 16-118
(Act 16-335) (2006). Despite this, the court looks to the FLSA rulemaking for guidance for two reasons: (1) the
Department of Labor discusses historical trends in the healthcare industry, and thus provides context for the factual
landscape at the time the D.C. City Council adopted the exemption; and (2) the Medicaid provider exemption in D.C.
Code § 2-220.05(9) concerns itself with the location of the rendering of services, which the Department of Labor also
discusses when explaining the evolution of rendering medical care.
26
services” exemption, which was adopted in 1974. Id. at 60,457–59. Although the Department had
intended that exemption to cover only unskilled workers who accompanied individuals, courts
interpreting the exemption did so more broadly and found that it covered a “wide range of direct
care workers,” such as home health aides and personal care aides who provided services to
individuals at their homes. Id. In other words, home health aides and personal care aides did not
enjoy the FLSA’s protections. That changed in 2013. In light of courts’ broad interpretation of
“companionship services” and the “dramatic transformation” in the health care industry, which
resulted in more medical services being rendered in patients’ homes, the Department decided to
narrow the scope of the “companionship services” exemption to remove “direct care workers”
from its purview. Id. at 60,454–55, 60,458, 60,469. Thus, with the change, “direct care workers”
are now covered by the Act’s protections. When announcing the amendment, the Department
described “direct care workers,” as employees who provide home care services, including
“certified nursing associates, home health aides, personal care aides, and caregivers.” Id. at
60,455. Moreover, the Department noted, these workers “perform increasingly skilled duties” and
are “professional caregivers.” Id.; see also id. at 60,472. In short, the Department’s interpretation
of “direct care worker” does not include providers of full-time transportation services. 6
In the end, when the Medicaid provider exemption is read in context and against the
pertinent regulatory background, the court concludes that the most logical reading of “direct care
services” is that it refers to medical or daily-living-assistance services. Plaintiffs, as non-health-
care workers who transport Medicaid patients to and from appointments, therefore, do not deliver
6
Defendant’s contention that its drivers assist passengers with seating and with safely entering and exiting vehicles
does not change the court’s view. See Def.’s Reply at 16. Likewise, the fact that Defendant shows up in a search of
the District of Columbia’s “Medicaid provider” contracts does not move the dial in Defendant’s favor. See Def.’s
Mot. at 20; Def.’s Mot., Ex. 3, ECF No. 10-3.
27
“direct care services.” Accordingly, neither Defendant (nor Plaintiffs’ employers) are exempt
from the directives of the Living Wage Act.
D. District of Columbia Wage Payment and Collection Law Count
Plaintiffs’ fourth count, which falls under the District of Columbia Wage Payment and
Collection Law, D.C. Code § 32-1301 et seq., rests on Plaintiffs’ other claims concerning the
underpayment of wages: the Minimum Wage Revision Act and the Living Wage Act counts. See
Compl. ¶¶ 156–62; see also D.C. Code §§ 32-1301, 32-1308. Because the court holds that
Plaintiffs have stated claims under both of these District of Columbia laws, Plaintiffs may proceed
with their claim under the Wage Payment and Collection Law.
E. Breach of Contract Count
At last, the court arrives at Plaintiffs’ breach-of-contract cause of action. This claim rests
on the theory that Plaintiffs are third-party beneficiaries of Defendant’s Contract with the District
of Columbia, because the Contract requires Defendant: (1) “to pay its employees and
subcontractors who perform subservices under the contract” the established living wage; and
(2) to include in any subcontracts a clause requiring the subcontractor pay its employees the living
wage. See Contract ¶¶ H.8.2, H.8.3. Plaintiffs allege that Defendant has breached this obligation
to pay drivers the living wage. Compl. ¶¶ 165–69. Defendant counters that Plaintiffs are not third-
party beneficiaries of the Contract and, therefore, Plaintiffs cannot pursue a breach-of-contract
claim for the alleged violations. Def.’s Mot. at 21–22.
The court agrees with Defendant. Under District of Columbia law, a third-party to a
contract may sue to “enforce the contract’s provisions if the contracting parties intend[ed] the third
party to benefit directly thereunder.” Monument Realty LLC v. Wash. Metro Trans. Auth., 535
F. Supp. 2d 60, 70 (D.D.C. 2008). However, a “party that incidentally benefits from contractual
28
provisions to which it is not a party is not a third-party beneficiary.” Corp. Sys. Res. v. Wash.
Metro. Area Trans. Auth., 31 F. Supp. 3d 124, 132 (D.D.C. 2014) (emphasis added). That principle
holds true particularly for government contracts. District of Columbia law recognizes “the basic
contract principle that third party beneficiaries of a Government contract are generally assumed to
be merely incidental beneficiaries, and may not enforce the contract absent clear intent to the
contrary.” Moore v. Gaither, 767 A.2d 278, 287 (D.C. 2001) (internal citation omitted). Thus, a
third-party that claims to be a beneficiary of a government contract faces an uphill climb.
Plaintiffs here have failed to show the contracting parties clearly intended for them to be
beneficiaries of the Contract. The provisions on which Plaintiffs rely are not the result of the
parties’ arms-length negotiations, but rather are contained in the Contract because the Living Wage
Act itself requires their inclusion. See D.C. Code § 2-220.04(a) (providing “[a]ll contracts and
government assistance . . . shall include the requirements”). Indeed, the Contract incorporates the
Act’s provisions, including its exemptions, in full. Compare id. § 2-221.01 et seq., with Contract
¶¶ H.8 to H.8.9. Thus, the Contract’s Living Wage Act requirements are not reflective of the
parties’ intent, but rather the City Council’s. Plaintiffs therefore are not third-party beneficiaries
who can enforce the Contract. Accordingly, Plaintiffs’ breach-of-contract claim is dismissed.
IV. CONCLUSION AND ORDER
For the reasons stated above, Defendant’s Motion to Dismiss is granted in part and denied
in part. Defendant’s motion to dismiss is granted as to Plaintiffs’ breach-of-contract claim, but is
denied with respect to the remaining four counts.
Dated: March 5, 2018 Amit P. Mehta
United States District Judge
29