joint employer. Factors that assess economic dependence include the employee’s: – role in in a specialty job; – opportunity for profit or loss based the employee’s managerial skill; – investment in equipment or materials; and – number of other contractual relationships for similar services. Joint Employer Rules in California Although DOL issued its new Final Rule, California has its own set of joint-employer rules that are generally more protective of workers than the federal law. The Industrial Welfare Commission and the California Supreme Court have adopted a joint-employer definition emphasizing the employer’s control over wages, hours and working conditions, and the extent to which the potential joint employer knew of and failed to prevent wage and hour violations. The California Supreme Court set out the factors that can create a joint employer relationship in Martinez v. Combs (2010). Under the Martinez test, to “employ” means (1) “to exercise control over…wages, hours or working conditions,” (2) “to suffer or permit to work,” or (3) “to engage, thereby creating a common law employment relationship.” The court in Ochoa v. McDonald’s Corp. (N.D. Cal. 2015) explained that “[a]ny of the three is sufficient to create an employment relationship.” Although a potential joint employer's control is often pivotal in
determining joint-employer liability, in some circumstances California statutes impose joint-employer liability regardless of who exercises control. For example, California Labor Code section 2810.3 holds companies strictly liable for wage and hour violations when they use staffing agencies, or other labor contractors, to supply workers. Federal Lawsuit to Challenge DOL Final Rule Although the DOL limits the four-factor test to “actions taken with respect to the employee’s terms and conditions of employment, rather than the theoretical ability” to take such actions, a coalition of state attorney generals filed a complaint for declaratory and injunctive relief in the Southern District of New York challenging the validity of the Final Rule. The complaint alleges that the Final Rule unlawfully narrows the joint employment standard under the FLSA, undermines critical workplace protections for the country’s low-income and middle-income workers, and leads to increased wage theft and other labor law violations. Until this lawsuit makes its way through the courts, or an injunction is issued, employers should consult with counsel to assess potential risks, and review whether they may be jointly and severally liable for employees’ wages in light of the Final Rule. Jennifer A. Mancera is an attorney with Noland, Hamerly, Etienne & Hoss. She represents companies in a variety of employment law matters and has extensive human resources management experience.
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