Hunton Employment & Labor Perspectives

On January 8, 2018, the United States Supreme Court denied a petition for certiorari seeking to overturn the Fourth Circuit’s new joint employer test under the Fair Labor Standards Act.  As a result, employers will continue to be faced with differing joint employer standards in the various federal circuits.

The Fourth Circuit held that FLSA joint employment inquiry involves “one fundamental question: whether two or more persons or entities are not 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.”

The panel identified six nonexhaustive factors that courts should use to guide their analysis of whether putative joint employers are “completely disassociated”:

1. Whether, formally or as a matter of practice, the putative joint employers jointly determine, share or allocate the power to direct, control or supervise the worker, whether by direct or indirect means;
2. Whether, formally or as a matter of practice, the putative joint employers jointly determine, share or allocate the power to — directly or indirectly — hire or fire the worker or modify the terms or conditions of the worker’s employment;
3. The degree of permanency and duration of the relationship between the putative joint employers;
4. Whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by or is under common control with the other putative joint employer;
5. Whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and
6. Whether, formally or as a matter of practice, the putative joint employers jointly determine, share or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll; providing workers’ compensation insurance; paying payroll taxes; or providing the facilities, equipment, tools or materials necessary to complete the work.

The Fourth Circuit focuses on whether the two entities are “completely disassociated.”  Unlike virtually all other joint employment standards, the Fourth Circuit’s “completely disassociated” test focuses on the relationship between the two entities, and not on the relationship between the putative joint employer and the employee.  According to the court, focusing the joint employment analysis on the relationship of the two entities is the only way to “squarely address the ‘joint’ element of the ‘joint employer’ doctrine.”

In typical fashion, the United States Supreme Court issued its order without comment and did not explain why it refused to hear the case.