Case: Salinas v. Commercial Interiors, Inc., No. 15-1915, (4th Cir. Jan 25, 2017)

Issues: Fair Labor Standards Act (“FLSA”), Joint Employment

Court Holding: For the purposes of plaintiff’s FLSA claim, joint employment existed between the two defendants.

Employment Counsel: To avoid a joint employer determination, entities should be careful to avoid codetermining the key terms and conditions of workers’ employment.  In the context of a construction space, this means that a court might find such a joint employer relationship between a contractor and a subcontractor when the contractor extensively supervises the projects of a subcontractor’s employees, the contractor provides most of the materials needed for the work, or the workers are subject to the contractor’s daily workplace protocols (such as regular update meetings, sign-in and out procedures, etc.)

Case Summary:  Plaintiffs were direct employees of J.I. General Contractors, Inc. (“J.I.”) a framing and drywall subcontractor.  Commercial Interiors, Inc. (“Commercial”) provided J.I. most of its work. Plaintiffs argued that J.I. and Commercial were joint employers, and in violation of FLSA and the Maryland Wage and Hour Law, the defendants failed to pay regular and overtime wages.

The 4th Circuit’s test for determining that J.I. and Commercial were joint employers under the FLSA included two steps. Joint employment exists (1) when two or more entities codetermine, directly or indirectly, “the essential terms and conditions of a worker’s employment” and (2) “the two entities’ combined influence over the essential terms and conditions of the worker’s employment render the worker an employee as opposed to an independent contractor.”

The Circuit Court outlined six factors which, though not exhaustive, should help lower courts determine whether two entities codetermine the essential terms and conditions of a worker’s employment and are joint employers for FLSA purposes. Using these six factors, the Circuit court concluded that Commercial’s relationship with the plaintiffs constituted such an employer-employee relationship. The six factors, with their application to this case, are as follows:

(1) Whether putative joint employers share power to direct workers: Commercial and J.I. both supervised the plaintiffs through informal instruction and formal, mandatory meetings. Commercial also required plaintiffs to wear uniforms with the Commercial logo and so outwardly identify as Commercial employees.

(2) Whether putative joint employers share the power to hire and fire workers or modify the terms or conditions of their employment: Commercial dictated the plaintiffs’ work schedule and even required overtime work.

(3) The “degree of permanency and duration of the relationship” between the two employers.

(4) Whether one putative joint employer is controlled by another putative joint employer: the defendants had a long standing business relationship and J.I. contracted almost exclusively with Commercial.

(5) Ownership of the premises that work is performed on: Commercial was in control of the premises that plaintiffs worked on.

(6) Whether putative joint employers jointly determine “functions ordinarily carried out by an employer”: Commercial provided plaintiffs with all the necessary tools and equipment needed to compete their work, it maintained plaintiffs’ hours on timesheets, and it demanded that Plaintiffs sign in and out daily.   

After this analysis, the 4th Circuit reversed the district court’s decision, finding that J.I. and Commercial were joint-employers for the purposes of the FLSA claim.   

For additional information about this case or other employment law matters, please contact Merritt Green at mgreen@gcpc.com or (703)556-6505.  Mr. Green leads General Counsel, P.C.’s Employment Law Practice and has been representing employers (and occasionally employees) for over 18 years.