Monday, August 6, 2012

Third Circuit Defines "Joint Employment" Under FLSA

In In re EnterpriseRent-A-Car Wage and Hour Employment Practices Litigation, 683 F.3d 462 (3d Cir. June 28, 2012), the Third Circuit defined "joint employment" under the FLSA. The case arises from a collective action for unpaid overtime brought by assistant managers. Enterprise Holdings, Inc. is the sole stockholder of 38 domestic subsidiaries. The sole question on this appeal was whether the parent and the subsidiaries jointly employed the managers.

The FLSA regulations expressly state that an employee may be employed by "two or more employers at the same time." 29 C.F.R. § 791.2(a). The regulations further inform us that the "determination of whether the employment by the employers is to be considered joint employment or separate and distinct employment for purposes of the act depends upon all the facts in the particular case." Hey, nobody ever accused the FLSA regs of being overly helpful.

The Third Circuit identified four specific factors to be used in determining whether an entity is a joint employer:
(1) authority to hire and fire employees; 
(2) authority to promulgate work rules and assignments, and set conditions of employment, including compensation, benefits, and hours; 
(3) day-to-day supervision, including employee discipline; and 
(4) control of employee records, including payroll, insurance, taxes, and the like.
But, the Court wants you to know that this is NOT an exhaustive list. You must consider "the total employment situation and the economic realities of the work relationship." The Court held that the parent did not jointly employ the managers. The important thing is that we now have an official test here in the Third Circuit.

Image: Third Circuit seal used in commentary on Third Circuit. Not official use.

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