Joint Employer Law and
the Family Medical Leave Act
A
recent decision by the Ninth Circuit Court of Appeals provides a good
summary of the joint employer law under the Family Medical Leave Act
(FMLA). In fact, the court's decision in Moreau v. Air France, 2003 U.S. App. Lexis 18999, No. 02-15872
(9th Cir. Sept. 15, 2003), is the first to review the joint employer rules
in this context and provides needed guidance to employers.
Employer Argued Not Covered by FMLA
The
FMLA covers employers who employ fifty or more employees in a seventy-five
mile radius. The California Family Rights Act (CFRA) imposes the same
coverage threshold. In this case, the court reviewed whether contracted
service workers should be considered in determining whether the employer is
covered by the FMLA.
Air
France
flies one flight per day in and out of San Francisco International Airport
(SFO) and contracts with outside entities for ramp and towing service,
cargo and baggage handling, and food preparation. If Air-France were
considered the "joint employer" of these contracted workers it
would be subject to FMLA/CFRA requirements.
Air
France
employed Stephane Moreau as its Assistant Station
Manager at SFO. Moreau requested a twelve-week FMLA/CFRA leave of absence
to assist his ill father in France.
Air France's
director of personnel informed Moreau that the request for leave was
denied. The company explained that Air France employed fewer than 50
employees at Moreau's worksite or within a 75-mile radius and thus was
exempt from the FMLA. Air France
warned Moreau that absence from work could lead to termination.
Moreau
took the leave anyway and was terminated. He sued in federal court claiming
violation of FMLA and CFRA. The district court granted summary judgment on
the ground that Air France was exempt from the FMLA and should not be
considered a joint employer of the contracted service workers. The Ninth
Circuit agreed. The opinion only addressed the FMLA, not CFRA; however they
are substantially identical in this area.
Regulations Provide Some Guidance
If
a joint employment relationship is found, employees jointly employed by two
employers must be counted by both employers, whether or not maintained on
one of the employer's payroll, in determining employer coverage and
employee eligibility. (29 C.F.R. section 825.106 (d).) The FMLA does not
contain language specifically addressing joint employment. However, the
federal regulations provide some guidance.
29 C.F.R. section 825.106 (a) & (b) provide:
(a)
Where two or more businesses exercise some control over the work or working
conditions of the employee, the businesses may be joint employers under
FMLA. Joint employers may be separate and distinct entities with separate
owners, managers and facilities. Where the employee performs work which
simultaneously benefits two or more employers, or works for two or more
employers at different times during the workweek, a joint employment
relationship generally will be considered to exist in situations such as:
(1)
Where there is an arrangement between employers to share an employee's services
or to interchange employees;
(2)
Where one employer acts directly or indirectly in the interest of the other
employer in relation to the employee; or,
(3)
Where the employers are not completely disassociated with respect to the
employee's employment and may be deemed to share control of the employee,
directly or indirectly, because one employer controls, is controlled by, or
is under common control with the other employer.
(b)
A determination of whether or not a joint employment relationship exists is
not determined by the application of any single criterion, but rather the
entire relationship is to be viewed in its totality. For example, joint
employment will ordinarily be found to exist when a temporary or leasing
agency supplies employees to a second employer.
Considerations from Existing Case Law
Since
there were no reported cases addressing joint employment in the FMLA
context, the court looked to Fair Labor Standards Act (FLSA) cases because
the FMLA and FLSA joint employer regulations mirrored each other. Examining
these cases, the Ninth Circuit set forth a number of factors that should be
considered in determining the existence of a joint employment relationship.
The court noted, however, that not one factor is controlling; instead the
totality and the economic reality of the circumstances must be scrutinized.
The
four primary factors include whether the employer (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.
Other
relevant factors include: (1) whether the work was a specialty job on the
production line; (2) whether responsibility under the contracts passed from
one contractor to another without material changes; (3) whether the
premises and equipment of the employer are used for the work; (4) whether
the employees had a business organization that could shift as a unit from
worksite to another; (5) whether the work was piecework or required
initiative, judgment or foresight; (6) whether the employee had an
opportunity for profit or loss depending on the 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.
Application of Factors to Air France and Its Service Contract
Employees
The
Ninth Circuit then analyzed the above factors to determine the relationship
between Air France
and its ground handling service contractors: food preparation, cargo
handling and ramp and towing service. The court emphasized that each case
will involve a fact specific analysis and that the totality of the
circumstances and the economic reality are critical.
The
court first noted that the four primary factors for establishing a joint
employment relationship were not met: Air France did not have the ability
to hire or fire ground handling company employees; it did not determine the
rate or method of pay for these employees; it did not keep employment
records for these employees; and it did not set or control the employees'
work schedules or working conditions. Air France had no authority to
control the workers. While Air France did check to make sure
its standards were met, these were safety standards that Air France was
obligated to double check. Air France provided only limited
and essential direction to the service company employees.
Other
factors also pointed against a joint employer relationship. The service
work was primarily performed on the premises of the ground handling
companies and the ground companies used their own equipment. The ground
handling companies serviced multiple carriers and could shift as a unit
from one carrier to another. The ground company employees had an opportunity
for profit or promotion based on their managerial skill. Importantly, the
ground handling companies were not economically dependent upon the
employer. For instance, when Air France terminated its contract
with one ground handling company, the ground handling company retained the
same number of workers.
Given
these facts, the Ninth Circuit concluded that Air France should not be
treated as a joint employer.
Supervision Often A Critical Issue
One
of the most important factors in joint employer cases is supervision and
control. For instance, in this case there was a question as to whether one
Air France
employee supervised employees at a ground cargo company it contracted with.
An Air France employee worked full time at the contractor's cargo facility
as an Air France Cargo Operations Manager. The Air France employee was
responsible for assuring the quality of services provided by the contractor
and interacted with the contractor's supervisor if problems arose.
Critically,
the Air France employee did not supervise the contractor's employees.
Instead, they had an immediate supervisor employed by the contractor who
monitored their performance, schedules, vacations, and so forth. The Air
France employee merely did a double check on the work to make sure it was
what he needed and reported to the contractor's supervisor during monthly
meetings if he noticed problems. The Air France employee was not involved
in day-to-day supervision and control of the contractor's employees.
Moreover, the court noted that ensuring lawful compliance to meet safety
regulations is not the same as control or supervision of employees.
Conclusion
Moreau v. Air France provides
needed guidance in the joint employer arena. Employers who have concerns
about whether they may have a joint employment relationship are advised to
seek competent labor and employment counsel.
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