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Labor and Employment Law Alert: Federal DOL Issues Broad Administrator's Interpretation on Joint Employment

January 26, 2016

The Department of Labor Wage and Hour Division issued an Administrator's Interpretation establishing new and expansive standards for determining joint employment under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).  The DOL states that joint employment exists when a person is employed by two or more employers such that the employers are responsible, both individually and jointly, for compliance with a statute. The DOL notes that joint employment can arise in a number of arrangements, ranging from sharing employees to using third party management companies, staffing agencies or labor providers.

This follows the August decision by the National Labor Relations Board in Browning-Ferris where the NLRB announced its expansive view of joint employment status, as it relates to the duty to bargain. The key point is that these agencies will scrutinize joint employer arrangements much more intensely than in the past.

The DOL states that the concepts of joint employment under the FLSA and MSPA are notably broader than the common law concepts of joint employment, which looks to the amount of control that an employer exercises over an employee. The DOL notes that in FLSA cases courts have found economic dependence under a multitude of circumstances where the alleged employer exercised little or no control or supervision over the employees.

Two types of joint employment arrangements are identified and discussed, horizontal joint employment and vertical joint employment arrangements. For more information and examples click here.

Supreme Court Developments

Class Actions: The Court considered in  Campbell-Ewald Co. v. Gomez whether companies can avoid class action claims by making an offer of full relief to the individual named plaintiff(s). The Court ruled in favor of the plaintiff, holding that an unaccepted settlement offer does not moot a plaintiff's case, thereby allowing the class action to proceed. Although this was a class action under a consumer protection law, this case could impact other class action cases, including wage and hour cases. 

ERISA Case: Many health plans contain a subrogation provision allowing the plan to recover from a participant when the participant recovers from a third party for the same benefits. On January 20, 2016, the Supreme Court held in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan that a health plan cannot bring a subrogation claim against a participant when the participant has spent the money received from the third party.

Pending Supreme Court Cases:

Labor Unions:  In 1977, the Court ruled that requiring public sector, non-union members to pay an agency fee to cover only the costs of bargaining did not violate their rights under the First Amendment. In Friedrichs v. California Teachers Association, Docket Number 14-915, the Court will take the analysis one step further and decide whether public sector union employees can be required to pay any fees to the union. Although the case is limited to public sector unions, it is an important case for all unions as the decision may have future ramifications for private sector unions as well. We will keep you advised.

Wage & Hour: The Supreme Court in Encino Motorcars LLC v. Hector Navarro, Docket Number 15-415, will address whether service advisors at car dealerships are exempt from the Fair Labor Standards Act's overtime pay requirements. The 9th Circuit ruled in 2015 that such workers were not exempt from overtime.

ERISA: The Court in Gobielle v. Liberty Mutual Insurance Company, Docket Number 14-181 will decide whether ERISA preempts Vermont's health care database law as it applies to a self-funded ERISA plan. The Second Circuit concluded that the Vermont law, as it relates to self-insured plans, is preempted, thereby limiting the ability of a state to gather information about claims and health status of its citizens. 

If you have any questions, please contact any member of the Carmody Torrance Sandak & Hennessey Labor and Employment Practice Group for more information: 

D. Charles Stohler
(203) 575-2626; cstohler@carmodylaw.com 

Giovanna T. Weller
(203) 575-2651; gweller@carmodylaw.com 

Domenico Zaino, Jr.
(203) 578-4270; dzaino@carmodylaw.com 

Howard K. Levine
(203) 784-3102; hlevine@carmodylaw.com 

Maureen D. Cox
(203) 575-2642; mcox@carmodylaw.com

Vincent Farisello
(203) 578-4284; vfarisello@carmodylaw.com

Sarah S. Healey
(203) 578-4225; shealey@carmodylaw.com 

Mark F. Williams
(203) 575-2618; mfwilliams@carmodylaw.com