The United States Court of Appeals for the Eleventh Circuit, which governs Florida, has recently provided guidance on how to analyze whether or not a company utilizing a third-party contractor can be held liable for wage and hour issues as a joint employer. Layton v. DHL Express United States, 686 F.3d 1172 (11th Cir. 2012).
The Layton matter involved drivers/couriers who were employed by a third-party contractor, Sky Land Express, Inc. (“Sky Land”), to deliver packages. Sky Land and DHL entered into an agreement under which Sky Land was obligated to employ drivers to deliver DHL’s packages as well as individuals performing other functions such as supervisors and dispatchers.
Sky Land utilized its own fleet of vehicles to deliver the packages, but it operated out of a warehouse owned by DHL. On a daily basis, DHL delivered packages to the warehouse that required delivery. The drivers could not commence work until a DHL employee gave them the go ahead. Furthermore, a DHL employee often would inspect the drivers’ vehicles and uniforms to ensure they conformed with the agreement between DHL and Sky Land. The uniforms and the trucks bore the logos of both DHL and Sky Land.
Leandre Layton filed a collective action under the Fair Labor Standard Act (“FLSA”) for unpaid overtime compensation. Mr. Layton named Sky Land, Gary Littlefield (the owner of Sky Land) and DHL as joint employers and as defendants in the action. The lower court found that the arrangement between the parties did not create a joint employer relationship, because “the contract with Sky Land allowed DHL to exercise only the minimal supervision necessary to monitor compliance with the contract” and the “undisputed facts [led] to the conclusion that if plaintiffs were employed by anybody, they were employed by Sky Land.”
In undertaking its analysis of the relationship, the Eleventh Circuit first ruled that the operative joint employer test within the Circuit remains the eight (8) factor test set forth in Aimable v. Long & Scott Farms, 20 F.3d 434 (11th Cir. 1994), and then applied these eight (8) factors to the relationship between DHL and the drivers:
- The degree of control of the workers;
- The degree of supervision, direct or indirect, of the work;
- The power to determine the pay rates or the methods of payment of the workers;
- The right, directly or indirectly, to hire, fire, or modify the employment conditions of the workers;
- Preparation of payroll and the payment of wages;
- Ownership of the facilities where work occurred;
- Performance of a specialty job integral to the business; and,
- The relative investments of DHL and Sky Land in the enterprise.
In analyzing the relationship between the drivers and DHL, the Court agreed that there was some small level of supervision of the drivers by DHL in that DHL oversaw the loading of packages onto the drivers’ trucks, DHL audited the drivers’ trucks and uniforms and that DHL communicated with the drivers if a non-routine situation arose, such as a re-delivery of a package. But, the Court found that most of the time the drivers were basically unsupervised while completing the most essential part of their job. Furthermore, the Court found that DHL had little to no involvement in the hiring or firing of the employees beyond requiring that the drivers undergo a background check. DHL also had no power to set the drivers’ pay rates and DHL also had no involvement in the payment of wages to the drivers. Overall, despite the fact that DHL owned the warehouse and provided some supervision to the drivers the Court found that DHL’s involvement with the drivers was on a macro-level and DHL provided little to no guidance on how to execute daily tasks. Furthermore, the Court noted that Sky Land’s contract with DHL was not exclusive and therefore that fact in addition to the totality of the circumstances indicated that the drivers were not economically dependent upon DHL.
With the high rates of wage and hour claims in Florida, employers who hire through third-party contractors should review the eight (8) factor test to determine if they have a joint employment relationship with the third-party’s workers.
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Dori K. Stibolt is a senior associate with the law firm of Fox Rothschild LLP. Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims. You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.