In Castaneda v. The Ensign Group, Inc., a California court of appeal held that a corporation that had no employees of its own, but owned and allegedly exercised control over a corporation with employees, may be the co-employer of the controlled corporation’s employees.

John Castaneda filed a class action complaint for minimum wage and overtime violations against The Ensign Group, which he alleged was the alter ego of Cabrillo Rehabilitation and Care Center, the nursing facility in which he worked. Ensign owned Cabrillo, but Ensign asserted that Cabrillo was an independent company that was not controlled or managed by Ensign.

On appeal from the trial court’s dismissal, the court of appeal held that sufficient facts existed to suggest that Ensign effectively controlled Cabrillo such that the issue should be decided by a jury, including that Ensign: (i) owned 100% of Cabrillo’s stock, (ii) shared the same corporate officers and address, (iii) provided training for Cabrillo employees, as well as provided all administrative services (including human resources, accounting and payroll) for Cabrillo, (iv) issued all paychecks, and (v) set forth employment policies and standards and was responsible for employee discipline.