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San Diego Business Law: What is the Joint Employer Doctrine?
Let’s say you are running a pharmacy in San Diego. Let’s call it San Diego’s Best Drug Store. Like many businesses, San Diego’s Best Drug Store has customers who want over-the-phone, on-demand, and speedy delivery of their products. Many of San Diego’s finest care facilities use San Diego’s Best Drug Store, so, the pharmacy signs various courier agreements (“Courier Agreements”) with an excellent and very fast delivery service company. Let’s call it San Diego’s Fastest Delivery. San Diego’s Fastest Delivery (“Fastest Delivery”) has about 100 employees who have cars, light trucks, and bicycles. They are the “small army” that delivers very quickly for San Diego’s Best Drug Store (“Drug Store”) and 90% of the deliveries are for the Drug Store.
Now let’s suppose that these 100 employees are disgruntled; they think that have been underpaid pursuant to various federal and California wage laws. They hire a lawyer and claim that the Drug Store and Fastest Delivery are “joint employers” and the Drug Store should be liable for the underpaid wages.
Under some circumstances, our hypothetical Drug Store COULD be liable as a “joint employer” depending on how the Courier Agreements were written and how the parties behaved with respect to the 100 Fast Delivery workers. If you want to avoid possible joint employer liability, it is important to have your agreements and contracts reviewed by a skilled and experienced business attorney such as at San Diego Corporate Law.
San Diego Business Law: What is the Joint Employer Doctrine?
Under both federal and California law, it is possible for two or more employers to jointly employ someone for purposes of labor laws. A joint employer circumstance can arise in three ways:
- When two or more employers agree to hire worker/s
- When one separate employer acts directly or indirectly in the interest of a separate other employer even if no joint employer arrangement is intended or desired
- When affiliated employers may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.
Under applicable law, the joint employers are jointly and severally liable for any wage or other obligations owed to the workers.
Courts look to many factors to determine whether a joint employer situation exists including:
- Who has the power to hire and fire the employees
- Who exercises supervision and control over the work done, work schedules, and/or conditions of employment
- Who determines the rate and method of payment
- Who maintains employment records and who does/provides for payroll, withholding, workers’ compensation, etc.
- What is written in any agreements signed by the purported joint employers
- The degree of permanency and duration of the relationship between the putative joint employers
- Whether one putative joint employer is controlled by the other
- The location where the work performed (e.g., on a premise owned or controlled by one or more of the putative joint employers)
- And more
No one factor is preeminent. The courts take a “circumstances of the whole activity” approach.
San Diego Business Law: Importance of Well-Drafted Agreements
As noted, skilled and talented corporate attorneys should review and custom-draft any agreement that your San Diego business might make that could implicate joint employer liability. A franchise agreement is one common example. Depending the agreement and the custom and practice of the parties, a franchisor can be deemed under California law to be the joint employer with the franchisee.
San Diego Business Law: Young v. Act Fast Delivery of W. Virginia, Inc.
The hypothetical discussed above is based on a recent case out of a federal court in West Virginia. See Young v. Act Fast Delivery of W. Virginia, Inc., No. 5:16-CV-09788 (US Dist. S.D.W.Va., Jan. 3, 2018). In that case, the drug store — Omnicare — was held to be a joint employer with the delivery company — Act Fast Delivery. The Courier Agreements contained language that was meant to create an independent contractor relationship between Omnicare and Act Fast. But, as the court noted, “In spite of the independent contractor language, … the [courier] agreements set forth many specific requirements that Act Fast was required by Omnicare to follow in order to adequately satisfy its duties.” According to the court, under the agreements, Omnicare basically controlled the work done by the drivers. Schedules attached to the agreement specifically mandated the different facilities of Omnicare customers to which the delivery drivers would deliver products, and established the routes, order of stops, and the times deliveries were to be made to each of these facilities. These were non-negotiable requirements. Further, Omnicare determined the types of vehicles that could be utilized, that certain Omnicare totes be used, the appearance and dress of the drivers and certain levels of professional conduct for the drivers. Further, Omnicare required that Act Fast discipline driver misconduct, monitor the drivers to ensure compliance, and essentially told Act Fast to fire various drivers who were not in compliance with Omnicare’s rules. Based on those and other facts, the court found there to be a circumstance of joint employment.
San Diego Business Law: Contact San Diego Corporate Law
The foregoing discussion highlights the importance of well-drafted written agreements. A good corporate lawyer could have helped Omnicare avoid the liability that they incurred in the Act Fast case. If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard has been named a “Rising Star” three years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Mr. Leonard can be reached at (858) 483-9200 or via email.
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