But how do you make that determination?
Suppose a private bus company provides services all over Connecticut. It’s largest customer happens to be a very large private university in the state. The company provides both interstate and intrastate service for the university, as well as shuttle bus service for the campus.
Are the bus drivers employees of both the bus company and the university? A recent case in the federal court in Connecticut set forth the various tests that the courts in Connecticut use to make that determination.
(Ultimately, the court denied the drivers’ claims that they were employees of the university.)
The court’s decision in Velez v. New Haven Bus Service can be downloaded here.
Where a plaintiff claims multiple simultaneous employers, or “joint employers” under the FLSA, “the overarching concern is whether the alleged employer possessed the power to control the workers in question . . . with an eye to the economic reality presented by the facts of each case.” In this so-called “economic reality” test, a court must first evaluate whether the alleged joint employer exercised formal control over a plaintiff’s employment.
The Second Circuit has recognized a four-factor joint-employer test to establish formal control, which asks whether an 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.
Simple enough, right?
Well, not exactly. In fact, the Second Circuit ”did not hold . . . that those [four] factors are necessary to establish an employment relationship” as the court said in another case (Zheng v. Liberty Apparel Co.). That decision applied a “functional control” test.
In doing so, a court may also consider the following factors:
(1) whether [the putative employer’s] premises and equipment were used for the plaintiffs’ work; (2) whether [the direct employer] had a business that could or did shift as a unit from one putative joint employer to another; (3) the extent to which plaintiffs performed a discrete line-job that was integral to [the putative employer’s] process of production; (4) whether responsibility under the contracts [between the direct and putative employers] could pass from one [entity] to another without material changes; (5) the degree to which the [putative employers or its] agents supervised plaintiffs’ work; and (6) whether plaintiffs worked exclusively or predominately for the [putative employer].
As the District Court recognized in the Velez case, the Second Circuit has not announced a definitive set of factors to establish functional control, recognizing that there will be “different sets of relevant factors based on the factual challenges posed by particular cases.”
How many of those factors will need to be met to satisfy a claim? That’s still unclear, but in the Velez case, two was not enough to establish joint employment.
Of course, longtime readers will know that this is not a new topic.
Employers should always be vigilant in making it clear who is and is not an employee of theirs. If you contract out certain work (food service, for example), make sure that you are not crossing the lines that seem like you are more their employer than a customer. For example, if you set these contractors’ hours and discipline them and they only worked for you, that might be closer to the joint employment relationship than you may have intended.
Contracts may help, but as you can see from the above, the courts will look past the language and look to either the “economic realities” or the “functional control” to make that final determination.