In our previous post, we addressed the National Labor Relations Board’s finding that franchisors can be considered joint employers of its franchisee’s employees.  The issue of the joint employer relationship continues to be a hot button issue.  Just last week, the Missouri Supreme Court announced a new rule of joint employer liability under the Missouri Minimum Wage Law (MMWL).  In Tolentino v. Starwood Hotels & Resorts Worldwide, Inc., No. SC93379 (Mo. banc Aug. 19, 2014), the court took a broad view of joint employers – even when criminal activity is involved.

Background to Tolentino – Joint Employer Liability

Tolentino arose out of a common joint employer situation – a temporary staffing agency sending employees to provide services to a client.  In Tolentino, Starwood Hotels, the operator of the Westin Crown Center in Kansas City, Missouri, contracted with Giant Labor Services (GLS) to furnish housekeeping services. The contract provided that GLS would furnish housekeepers on an as-needed basis, and Starwood would pay GLS $5.00 for each room cleaned. The contract also provided that GLS would be responsible for hiring, disciplining, and paying the housekeepers.  It also specifically stated that GLS’s employees would not be considered employees of Starwood for any purpose.

During his employment with GLS, Tolentino provided housekeeping services for the Westin Crown Center. After a few months of employment, Starwood notified GLS that Starwood no longer wanted the plaintiff to work at the hotel due to performance concerns. The plaintiff received $0.00 from GLS in his final check for the services performed for Starwood, as GLS deducted the entire after-tax amount for visa fees, a practice that is clearly illegal. Based on GLS’s deduction practices for the plaintiff and other employees, GLS executives were later convicted of violations of federal racketeering laws.

Tolentino recovered $3,150 from GLS in a separate criminal suit, which was deemed to be his “total loss” in that suit.  He also filed a separate civil suit against Starwood for violations of the MMWL. Starwood claimed that it could not be held liable because it was not his employer.  It also argued it did not set the terms of the plaintiff’s compensation, the plaintiff earned more than minimum wage before GLS illegally deducted his wages, and Starwood had no idea GLS illegally deducted his wages.

Under Missouri and federal law, an employer is a joint employer if it has the power to: 1) hire and fire the worker; 2) supervise and control the worker’s schedule and conditions of employment; 3) determine the worker’s wages and method of payment; and 4) maintain records related to the worker’s employment.  The trial court and appellate court did not decide whether Starwood was a joint employer, holding that even if it was, it could not be held liable for the unforeseen criminal acts of GLS.

The Missouri Supreme Court’s Ruling

The Missouri Supreme Court held Starwood’s status as a joint employer was an open question. The Court reasoned that Starwood’s authority to recommend a housekeeper’s removal, set cleaning standards, establish per-room rates paid to GLS, and record how many rooms each housekeeper cleaned, might be evidence that Starwood should be considered a joint employer.

However, the court overruled the lower courts and held that Starwood could be held liable for GLS’s criminal acts. The court found that the MMWL is a remedial statute designed to be interpreted broadly in order to effectuate its purpose of ensuring employees receive the legally mandated minimum wage. Noting that refusing to impose joint liability on Starwood would place the risk of underpayment of wages squarely on the shoulder of the employees, the court held that if Starwood is considered to be a joint employer, it has responsibilities under the MMWL. Those responsibilities, the court held, were not absolved by GLS’ unforeseen criminal acts. The court remanded the case for further consideration to the trial court.

What This Means for Missouri Employers

Tolentino may have broad repercussions for employers under the MMWL, as well as other Missouri laws. First, Tolentino teaches that despite language in a temporary staffing agency contract, a party may still be deemed to be an employer of a worker under the joint employer test. In Tolentino, Starwood’s contract with GLS specifically provided that Starwood would not be deemed to be an employer of the housekeepers and delineated each party’s responsibilities for wage payment, supervision, and hiring and firing. Despite this, the court analyzed the four factors of the joint employer test, ruling that the facts surrounding the plaintiff’s employment indicate that Starwood could be a joint employer. The lesson to Missouri employers here is that an employment contract is not conclusive for purposes of joint employer determination. Rather, courts will look to the facts and circumstances surrounding the employment relationship.

The second lesson of Tolentino is that if an employer is deemed to be a joint employer, that employer may be liable under many Missouri laws for actions by a third party. Although Tolentino specifically addressed the MMWL, Missouri has several laws that are construed broadly to protect employees in the workplace. For example, the Missouri Workers’ Compensation Law, the Missouri Prevailing Wage Law, and the Missouri Human Rights Act are often interpreted in favor of employees. Tolentino should give pause to employers subject to these laws, as the case may signal a willingness of the courts to impose expanded employer liability.

As joint employer relationships become more common in the workplace, whether through franchising or staffing agency relationships, analyzing the day-to-day relationship between an employer and an employee may significantly reduce the risk of liability under Missouri laws when acts are committed by another employer.