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D.C. Circuit Broadens Joint Employment Test Under NLRA

Whether a business is an “employer” of a particular employee may have significant consequences for its obligations under federal and D.C. law.  However, when a business is one of several that have a relationship with an employee, it is not always clear whether that business is an employer. In these cases, it is necessary to determine whether the business is a “joint employer” for purposes of applicable law. In a recent decision, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) attempted to clarify the joint employment analysis under the National Labor Relations Act (“NLRA”).

 

What is joint employment?

Joint employment issues often arise under the NLRA, which governs collective bargaining. The NLRA specifies only that an employer “includes any person acting as an agent of an employer, directly or indirectly” 29 U.S.C. § 152(2). The Supreme Court has interpreted this to require an entity to “possess[] sufficient control over the work of the employees to qualify as a joint employer” Boire v. Greyhound Corp., 376 U.S. 473, 481 (1964).

The courts and the National Labor Relations Board (“NLRB”) have narrowed the test, making it easier for a putative employer to show that it is not a joint employer. However, the D.C. Circuit’s December 28, 2018, decision in Browning-Ferris Industries of California, Inc. v. NLRB may steer the test in favor of employees.

 

Joint employment has previously required only actual, direct, and immediate control.

For many years, courts held that two businesses are joint employers if they “exert significant control of the same employees” by “shar[ing] or co-determin[ing] those matters governing essential terms and conditions of employment NLRB v. Browning-Ferris Indus. of Pa., Inc., 691 F.2d 1117, 1124 (3d Cir. 1982).  Later NLRB decisions narrowed the analysis to require “(i) actual control, as opposed to the right to control, and (ii) direct and immediate control, not indirect control.”  And in September 2018, the NLRB proposed a rule that would require a putative joint employer to “possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.”

 

The D.C. Circuit now permits consideration of unexercised and indirect control.

In the latest Browning-Ferris decision, however, D.C. Circuit upheld a broader joint employment analysis considering “both (i) an employer’s authorized but unexercised forms of control, and (ii) an employer’s indirect control over employees’ terms and conditions of employment.”  It reasoned that this test is grounded in common-law rules of agency, which underpin the NLRA. The Court declined to require actual or direct control to be the only or “most important” part of the analysis.

 

The joint employment test will likely remain uncertain.

The D.C. Circuit’s decision is significant not only because it establishes a broader test for joint employment, but because it strongly suggests that the NLRB’s proposed rulemaking is impermissibly narrow. “The Board’s rulemaking,” the Court noted, “must color within the common-law lines identified by the judiciary.” Against this backdrop, the definition of joint employment may remain in flux.

 

This material is for informational purposes only and should not be relied on for legal advice.  For legal assistance with an employment matter, contact our Firm through the “Contact Us” page on our website, or calling us at 202-795-9999. 

Discovering Past Failure to Pay Overtime Wages

D.C. law requires an employer to pay a “non-exempt” employee overtime for any hour worked in excess of 40 hours in a workweek. Further, an employer must make, keep, and preserve records for three years regarding, among other things, each employee’s regular hourly rate of pay, total hours worked each workday and each work week, and time of day and day of week on which employee’s workweek begins.  .  As explained below, if an employer does not timely pay overtime wages and does not keep required wage records, the employer cannot avoid liability by belatedly paying those wages.

If an Employer Fails to Pay Overtime, the Employee is Entitled to Damages Based on Unpaid Wages.

Under District law, if an employer pays an employee less than the wage to which the employee is entitled, the employer is liable to the employee in the amount of unpaid wages, statutory penalties, and, with certain exceptions, liquidated damages equal to three times the amount of unpaid wages.  A court may reduce liquidated damages to no less than unpaid wages only if the employer demonstrates that the act or omission was in good faith, that the employer had reasonable grounds to believe that the act or omission was not in violation of the law, and the employer promptly paid the full amount of wages claimed to be owed to the employee.

An Employer Cannot Avoid Liability by Paying Overtime After Wages are Due.

Neither D.C. law nor the similar federal Fair Labor Standards Act (FLSA) gives an employer the opportunity to correct the failure to pay an employee wages due so as to avoid liability.  An FLSA violation occurs when an employer fails to pay employees “their minimum and overtime wages on their regularly scheduled paydays.”  Martin v. United States, 117 Fed. Cl. 611, 621 (2014).  Further, D.C. law requires an employer to pay an employee “all wages earned . . . on regular paydays designated in advance by the employer and at least twice during each calendar month.”  Thus, once an employer fails to timely pay an employee wages, a violation has occurred.

In the Absence of Employer Records, Damages May Be a Just and Reasonable Approximation Based on Evidence.

As explained above, damages for a violation of D.C. wage law are a function of unpaid wages.  In the absence of wage records, however, under the FLSA, an employee must show that they “performed work for which [they were] improperly compensated . . . and produc[e] sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”  Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1046, 1047 (2016) (quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946)).  The employer may then rebut the employee with “evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inferences to be drawn from employee’s evidence.  If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.”  Anderson, 328 U.S. at 687–88.

Although an Employer Cannot Correct a Violation, It Does Have Options.

Even if an employer belatedly provides estimated back pay in an amount that equals or exceeds the amount of back pay actually owed, supported by evidence, the employee may still bring a claim under D.C. wage law. Such a claim could result in damages equal to twice unpaid wages, at a minimum.

Nonetheless, there are steps an employer may take to manage its liability in cases where it has discovered that it has failed to pay overtime wages or keep records.  An employer in this situation should consult with an attorney to understand the options.

This material is for informational purposes only and should not be relied on for legal advice.  For legal assistance with an employment matter, contact our Firm through the “Contact Us” page on our website, or calling us at 202-795-9999. 

Podcast: Legal Issues for Business Owners

On May 28, 2019, GMP Partner Tom Martin and Associate Attorney Kevin Hilgers appeared as guests on the Rhode Island Avenue Radio Podcast. Listen to the conversation with Kyle Todd, Executive Director of Rhode Island Avenue NE Main Street, as they discuss educating employers about the District’s new Universal Paid Leave tax, as well as D.C.’s next Minimum Wage increase on July 1, the legal status of marijuana in D.C., and overtime for tipped workers.

Please note that this podcast is created by, and remains the intellectual property of, Rhode Island Avenue Main Street.

This material is for informational purposes only and should not be relied on for legal advice.  For legal assistance, contact our Firm through the “Contact Us” page on our website, or calling us at 202-795-9999. 

Overview of D.C.’s Wage Theft Prevention Amendment Act

D.C.’s Wage Theft Prevention Amendment Act of 2014 (the “Act”) changed wage-hour laws with the aim of enhancing worker protections.  Under the Act, employers are subject to enhanced remedies, fines, and requirements aimed at enforcing wage payment laws.  Violation of some provisions may cost employers thousands of dollars.  Accordingly, employers are encouraged to learn how this Act impacts their business practices and to take measures to comply with the law.

Increased Penalties

The Act increased penalties for employers committing wage-hour violations and subjected employers to criminal liability for negligent noncompliance in certain instances.  The Act also permits the Mayor to assess administrative penalties against employers and makes legal representation more accessible for wage theft plaintiffs.  As a part of strengthening worker protection laws, the Act treats threats as a form of retaliation.  The Act makes it unlawful for an employer to retaliate against an employee for lodging a complaint alleging noncompliance with wage-related laws.  Employees are protected from retaliation even when an employer mistakenly believes a complaint was made.

New Liabilities

The Act also creates new wage theft liability for employers.  For example, under the Act, general contractors and subcontractors can be held jointly and severally liable when a subcontractor fails to pay an employee her wages earned.  Related provisions have similar implications for temporary staffing firms.

Notice Requirements

To hold employers accountable for the payment of wages, under the Act’s notice requirement provisions, employers must furnish employees with written notice of their employment containing the name, phone number and address of the employer; the employee’s regular payday; and the employee’s rate of pay as well as the basis for the rate.  Employers must retain copies for proof of compliance.

 

This material is for informational purposes only and should not be relied on for legal advice.  For legal assistance with an employment matter, contact our Firm through the “Contact Us” page on our website, or calling us at 202-795-9999. 

Employer FAQs on the ADA

Under the Americans with Disabilities Act (“ADA”), discrimination can include an employer’s failure to make reasonable accommodations for applicants or employees who have physical or mental limitations that are known to the employer.  These accommodations must be provided unless the employer can demonstrate that the accommodation would impose an undue hardship on the operations of the business.  The following is a brief overview of these ADA requirements.

What is a Reasonable Accommodation?

A reasonable accommodation is any modification or adjustment to a job or the work environment that will enable a qualified applicant or employee with a disability to participate in the application process or to perform essential job functions. Generally, a reasonable accommodation must only be provided if the disability is “known” to the employer, the disabled individual requests one, and the accommodation would not be an undue hardship to the employer.

What are examples of reasonable accommodations?

Accommodations can include restructuring a job, modifying work schedules, acquiring or modifying equipment, permitting the use of service animals, providing qualified readers or interpreters, or appropriately modifying examinations, training, or other programs.

How can an accommodation be an undue hardship?

An undue hardship is a significant disruption, difficulty or expense on the employer. Factors to consider include:

  • Nature and cost of the accommodation
  • Financial resources of the employer
  • Number of employees at the employer
  • Overall resources of the employer
  • Impact on operations

For which conditions must accommodations be made?

 Accommodations must be made for people with physical or mental impairments that substantially limit major life activities, such as seeing, hearing, speaking, walking, breathing, performing manual tasks, learning, caring for oneself, and working.  In addition to disabilities, accommodations must also be made for pregnancy, childbirth or a related medical condition and all aspects of religious observance.

How can an employer be found liable under the ADA?

An employer will be liable for the denial of a “reasonable accommodation” if the employee proves:

  • She has an ADA covered disability;
  • Her employer had notice of her disability;
  • A reasonable accommodation would permit her to perform essential functions; and
  • Her employer refused to provide accommodation.

The above is for informational purposes only and is not legal advice.  If you are an employer and are faced with an issue related to the above, please go through the “Contact Us” page on our website, or call (202) 795-9999.