“How You Doin’? said the character Joey from the TV show “Friends“. I say that here because this post is about the “joint employer” test for the Fair Labor Standards Act and its an otherwise dry post.
“I know!” (You might be saying, if you were Monica from that same show.)
“Could that BE any more boring?” (To paraphrase Chandler.)
Your response should be, a la, Rachel, “Nooooo!!!
But here’s why you should care and not take a break from this topic (besides knowing that “We were on a break” is not a valid defense to an FLSA claim.)
In this age of leased employees and independent contractors who aren’t really independent, wage & hour issues like joint employment are getting more heavily scrutinized by the Department of Labor and courts.
So how does the issue of a “joint employer” come up?
Two ways: First when employees work for two employers, and the total hours worked is over 40, the employee may be eligible for overtime if the employers share the employee or get benefit from that employee’s work.
Second, if the employee works for two employers, then the employer may have to include him or her in determining the the number of employees each employer has.
The Wage & Hour Development blog reported on an important new case out of the Third Circuit Court of Appeals recently. While it hasn’t yet been adopted in Connecticut or the Second Circuit, it is already providing important guidance to courts and employers elsewhere because its logic is perceived to be sound.
The Court concluded that Enterprise Holdings Inc. was not a joint employer with its car rental subsidiaries’. The plaintiff assistant managers could not seek relief against the parent company. As recapped in the blog post:
In its groundbreaking opinion, the Third Circuit enumerated a standard that involves examination of the putative employer’s: 1) ability to hire and fire the relevant employees; 2) ability to issue and implement work rules/assignments; 3) ability to establish conditions of employment for the workers; 4) involvement in day-to-day supervision of workers, notably the right to discipline; and, 5) actual control of employee records, such as payroll, insurance, or taxes.
The Court took pains to point out that these factors are not exclusive and should not be rigidly applied. The Court emphasized that if other factors demonstrated that an entity exercised significant control over a group of employees, then that evidence, when coupled with the enumerated factors, might be persuasive on the issue of whether a joint employment relationship exists.
So what’s the takeaway from this? If faced with a joint employer question, courts will look at the control and direction by the employer. If you use leased employees or joint employer relationships, this case should give you new reason to review them to make sure they can pass muster under this test.
Hopefully, it makes sense. Otherwise, I may have to follow the advice from Chandler: “You have to stop the Q-Tip when there’s resistance.”