Joint Employment Concept Gets Really Broad Under FLSA

In January of 2017, the Fourth Circuit created a new test for joint employment with respect to FLSA. While this opinion is binding only in the Fourth Circuit, it shows that the direction of joint employment doctrine is pushing towards finding joint employment whenever possible. What are the implications of joint employment under FLSA? Instead of tracking hours just for one organization, the company could wind up owing overtime when the employee works for the other organization as well, and goes over 40 hours.

Who’s the Boss, Anyway?

In one case, Contractor employed several drywall installers.¹ Contractor did most of its work for another company, Commercial. These drywall installers sued both companies, claiming that they worked for both Contractor and Commercial, and their hours had to be aggregated. As the court considered it, the facts showed a lot of overlap and ambiguity as to who was really the employer, as both entities were acting as employers in different circumstances, providing direction, materials, and so on. Commercial provided tools and equipment and actively supervised the work. It made employees come to meetings and sign in and out. Commercial told Contractor how many employees it needed, and for how many hours. In the end, the Fourth Circuit concluded that they were joint employers. Commercial even gave employees clothing with its logo and told them to say they worked for Commercial. (In addition, the Court concluded that these were employees, not independent contractors, probably not surprising with this degree of direction and control.)

A Shiny Brand New Test for Joint Employment

It’s not really too surprising that the Fourth Circuit found joint employment. What was more surprising was that it invented an entirely new test and analysis. The Fourth Circuit’s new test has two elements: (1) more than one person/entity has some responsibility for the terms of conditions of the worker’s employment; (2) and the combined influence of the two makes the worker an employee rather than an independent contractor.

The new test considers six factors:

• Do the employers jointly have the power to control or supervise the worker, directly or indirectly?

• Do the employers both have the power to hire or fire the worker or modify the terms and conditions of employment?

• Do the employers have a long or permanent relationship between them?

• Does one employer control the other?

• Who controls the work premises?

• Do the employers jointly allocate or share responsibilities for matters like payroll, payroll taxes, workers’ compensation insurance, equipment, tools, or materials?

The Court did note, however, that FLSA as a statute defines “employment” very broadly indeed, and that other statutes don’t define it so broadly. So the Court wasn’t necessarily pushing to expand this analysis to other statutes.

When are Religious Organizations Joint Employers?

How does this apply for religious organizations? First, of course, analyze whether FLSA even applies. As we’ve discussed in more detail elsewhere, work overseas is usually not subject to FLSA, and many religious organization employees are exempt either under standard factors or the ministerial exception. But if FLSA does apply, seconding and sharing relationships could mean that there is joint employment.

For instance, if mission groups are seconding missionaries, they may both have power to control and supervise the missionary. If the seconding arrangement is rather distant, of course they may not.

Both groups likely have the power to fire the worker or modify the conditions of employment. There may or may not be a close and longstanding relationship between the two mission groups. Or consider a church and a church plant—there likely would be power exerted by both churches, plus a longstanding relationship.

In our experience, it is probably less likely that one mission would control the other. However, this factor could come true in a denominational setting, as between a parish and diocese, for instance.

Is it likely that two religious organizations would jointly control the workplace? That could happen in some instances, as with a joint project or some kind of cooperative venture.

Then there is the question of who has responsibility for the mechanics of employment. It seems that would usually be one organization or the other, but it could be divided, with one withholding payroll taxes, for instance, but another providing insurance.

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¹Salinas v. Commercial Interiors, Inc., No. 15-1915 (4th Circuit, Jan. 25, 2017), found at http://www.ca4.uscourts.gov/Opinions/Published/151915.P.pdf.