The Supreme Court has just announced its decision denying review of the recent 4th Circuit Court test for determining who is a joint employer. Whether a company/individual is a joint employer is a significant issue for many businesses and means that it may be possible to hold related businesses liable for each other’s illegal employment practices.
In 2017 the Fourth Circuit (which includes Virginia, West Virginia, Maryland, North Carolina and South Carolina) issued a broad holding defining a “joint employer.” The opinion concluded that in order to avoid responsibility for an employee, an entity or person must be “completely disassociated with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine – formally or informally, directly or indirectly – the essential terms and conditions of the worker’s employment.” This test looks at the relationship between the potential “joint employers”, rather than on the relationship between employer and employee.
This decision is important for employees in a variety of situations, such as when working for a franchise or as a contract worker placed in a job. When FLSA violations arise, employers may try to shift blame to the “other” employer to avoid taking responsibility for failing to pay required overtime compensation or minimum wages. The 4th circuit decision allows both employers to be held liable.
The decision means that a range of different tests to determine when companies are joint employers will persist in the 13 regional federal appellate courts.
For more information or if you have any wage and hour question, please contact the dedicated Atlanta wage and hour lawyers at Buckley Beal, LLP