Best Ohio Wage and Hour Attorney Answer: Is the staffing company or the company that I’m sent to responsible for making sure that I’m properly paid minimum wage and overtime? What does “joint-employer” mean? Does an employer have an obligation to keep accurate pay records for its employees?
A common phenomenon in today’s workplace is that more and more companies are seeking “temporary” or “probationary” employees from staffing agencies who are assigned to work at the client company for some determined period of time and then are either let go (i.e. the assignment period ends), or are hired on as permanent employees of the client employer. This staffing agency-client company relationship often presents unique questions of law regarding who an employee’s actual “employer” is with respect to alleged misconduct in the workplace, including employment discrimination claims, wrongful termination claims and/or wage theft claims. Oftentimes, the two companies will point the finger at each other and say “we aren’t the employer, they are.” In truth, sometimes both companies are on the hook.
This situation was touched upon in Copper v. Cavalry Staffing, LLC. In Copper, the United States District Court for the Eastern District of New York was faced with a motion to dismiss filed by two employers seeking to gain dismissal of employee Derek Copper’s claims. Specifically, Copper was an employee of Cavalry Staffing (a staffing agency) and was then placed with Enterprise Holdings, Inc. (Enterprise Rent-A-Car) to work at one of Enterprise’s locations. Copper claimed as part of his lawsuit against both Cavalry and Enterprise that he worked in excess of 40 hours per week, yet he (and several other employees) were not paid any compensation for those hours, thus, resulting in both minimum wage and overtime compensation violations under the Fair Labor Standards Act (“FLSA“). As our wage and hour attorneys have repeatedly blogged about, the FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular hourly rates for hours worked beyond 40 per week. (See How Do The New Overtime Rules Help Me?; Can I Sue A Franchisor For Wage Theft?; What Damages Can I Get For Unpaid Overtime?; Should Tipped Workers Be Paid Overtime?; What Is Minimum Wage In Ohio For 2016?; and Does My Job Need To Pay Me Minimum Wage?).
Enterprise sought dismissal of Copper’s claims against the company, arguing that it was not his “employer” under the law. The court denied Enterprises’ motion to dismiss the wage and hour overtime claim based on two separate legal theories. First, the court mentioned the “economic realities test” under the FLSA whereby courts consider “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” Second, and alternatively, the court mentioned the “join-employer status” test whereby an entity is considered an “employer” if it had “functional control” over the worker in question. Again, the court cited to several factors for this test, including:
Alternatively, joint-employer status is found when the alleged employer had “functional control” over the workers. Zheng v. Liberty Apparel Co., 355 F.3d 61, 72 (2d Cir. 2003). To assess whether Enterprise had functional control over plaintiffs, the Court may consider: (1) whether Enterprise’s premises and equipment were used for plaintiffs’ work; (2) whether Cavalry had a business that could or did shift as a unit from one putative joint employer to another; (3) the extent to which plaintiffs performed a discrete line job that was integral to Enterprise’s process of production; (4) whether responsibility under the staffing contract could pass from Cavalry to another agency without material changes; (5) the degree to which Enterprise supervised plaintiffs’ work; and (6) whether plaintiffs worked exclusively or predominantly for Enterprise. See id. This is a highly factual inquiry that is generally not decided as a matter of law. See Barfield v. New York City Health and Hosps. Corp., 537 F.3d 132, 143-44 (2d Cir. 2008) (“Because of the factintensive character of a determination of joint employment, we rarely have occasion to review determinations made as a matter of law on an award of summary judgment.”); Zheng, 355 F.3d at 76 n.13 (“The fact-intensive character of the joint employment inquiry is highlighted by the fact that two of the three leading cases in this circuit were appeals from judgments following bench trials. In the third case, we decided that genuine issues of material fact precluded summary judgment on the ultimate issue of FLSA coverage.” (citations omitted)).
After setting forth the law, the court denied Enterprises’ motion to dismiss because Copper had “adequately pled that Enterprise exercised functional control over [the employees] as a joint employer.”
Separately, both Enterprise and Cavalry moved to dismiss Copper’s claims under the FLSA and New York state law for the alleged wage and hour violations. As to the overtime claims, the court denied the two employers’ joint motion to dismiss, finding that Copper had adequately pled in his complaint that he and other similarly-situated employees were denied overtime compensation for time worked over 40 hours in a workweek:
The First and Third claims in the Second Amended Complaint allege that defendants failed to pay plaintiffs for the time they worked in excess of forty hours in any given week. See Second Amended Complaint ¶¶ 42, 47, 55, 58. Defendants argue that plaintiffs’ allegations are too broad to create a plausible inference to maintain an overtime claim. Plaintiffs, however, provide two workweeks as representative examples in which Copper was unpaid for hours he worked in excess of forty. Defendants attempt to defeat these allegations by appending to their motion pay stubs and wage statements that indicate plaintiffs worked fewer hours than alleged and that plaintiffs were compensated for each hour worked. Consideration of this extrinsic evidence provides little probative value for this claim because plaintiffs plausibly allege that defendants did not account for hours they worked “off-the-clock;” therefore, these unaccounted-for hours would not appear in the wage statements furnished by defendants.
Accordingly, defendants’ motion to dismiss is DENIED as to plaintiffs’ First and Third claims.
Conversely, the court granted the joint motion to dismiss Copper’s minimum wage claims. Cooper argued that since he and other employees were not paid at all for the hours that they worked over 40, they were not paid minimum wage for those hours. Essentially, they argued that obviously nothing is less than minimum wage. But, the Court disagreed because even though Copper and the other employees were not paid at all for work over 40 hours, even so, they still would have been paid at or above minimum wage for the entire week, and thus, the violation was not a minimum wage violation:
The Court agrees with defendants’ method of calculating an employee’s rate of pay. Under the FLSA, “[t]he regular hourly rate of pay of an employee is determined by dividing his total remuneration for employment . . . in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid.” 29 C.F.R. § 778.109; see also Johnson v. Equinox Holdings, Inc., No. 13-CV-6313, 2014 WL 3058438 at *3 (S.D.N.Y. July 2, 2014) (rejecting plaintiffs’ argument that failure to compensate for off-the-clock hours resulted in a minimum-wage violation when average hourly wage did not fall below the minimum wage).
Still a little confused? Let’s look at an example: if an employer pays an employee $500 for 40 hours of work in a week, the effective hourly rate would be $12.50 per hour. If that same employee worked an additional 10 hours that week and was not paid at all for those additional 10 hours, then certainly the employee would have a cause of action for unpaid overtime (assuming he/she was eligible for overtime pay); however, there still would be no minimum wage violation because the effective hourly rate would still be $10.00 per hour (500 divided by 50). Since $10.00 is still above the minimum wage, the FLSA would not provide the employee a minimum wage claim in this scenario.
Still, in Copper’s case, the loss of the minimum wage claims likely would be irrelevant because the FLSA overtime claim would cover any unpaid wages beyond 40 hours anyways so there would no real need for a minimum wage claim. While the employers may have gotten the minimum wage claim dismissed, it was an empty victory.
If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at The Spitz Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at The Spitz Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call 866-797-6040.
The materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Am I entitled to overtime?”, “Does my job have to pay me for …”, “My paycheck is not right…” or “What do I do if…”, the your best option is to contact an Ohio overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.