Individuals employed by subcontractors in construction (and other industries) from time to time seek to go “up the food chain” and assert that control was exerted by general contractors on their job sites sufficient to render those general contractors “joint employers” for purposes of the wage laws. The goal of couse is to hold such general contractors liable for any failure to pay wages by the sub-contractor, their direct employer. A new decision rejects one such attempt. Almaraz v. Vision Drywall & Paint, 2014 U.S. Dist. LEXIS 66924 (D. Nev. 2014).
In Almaraz, the court analyzed the traditional joint employer factors set forth in Bonnette v. California Health and Welfare Agency, 704 F.2d 1465 (9th Cir. 1983) and the more “functional” factors identified in Torres-Lopez v. May, 111 F.3d 633 (9th Cir. 1997). Specifically, the Court analyzed whether, under Bonnette, the general contractors:
(1) had the power to hire and fire employees, (2) supervised and controlled employee work schedules or conditions of payment, (3) determined the rate and method of payment, and (4) maintained employment records.
The Court also separately analyzed whether the general contractors exerted functional control under theTorres-Lopez factors, addressing:
(1) whether the work was a specialty job on the production line; (2) whether responsibility under the contracts between a labor contractor and an employer pass from one labor contractor to another without material changes; (3) whether the premises and equipment of the employer are used for the work, (considering the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers); (4) whether the employees had a business organization that could or did shift as a unit from one [worksite] to another; (5) whether the work was piecework and not work that required initiative, judgment or foresight (considering whether the service rendered requires a special skill); (6) whether the employee had an opportunity for profit or loss depending upon [the alleged employee's] managerial skill; (7) whether there was permanence [in] the working relationship; and (8) whether the service rendered is an integral part of the alleged employer’s business.
Finding all of these factors under both tests to be neutral or favorable to the general contractors, with the exception of the setting of wage rates and maintenance of records which “slightly” favored joint employer status due to the general contractors’ indirect control over wage rates and the maintenance of time records, the court ruled as a matter of law that the general contractors did not “jointly” employee the subcontractor’s employees.
Litigation and DOL enforcement efforts continue to focus on joint employer issues. This is expected to increase under the leadership of the new USDOL Wage and Hour Administrator. Businesses which extensively use subcontractors must closely analyze how relationships are managed to limit subcontractors’ employees’ ability to successfully assert joint employer claims.