Wage and hour plaintiffs, like all plaintiffs, seek recovery from the largest, most viable defendants. Often, employees who separate from failing businesses seek to broaden the scope of the concept of “employer” within the meaning of wage-hour laws and include as defendants other potentially-liable parties with “deep pockets.” As discussed here, a federal court in Pennsylvania recently rejected call center plaintiffs’ efforts to ensnare Bank of America in their FLSA litigation on a joint employer theory. Now, a federal court in California – applying California state law – has rejected a similar effort to include the (defunct) primary employer’s outside Human Resources and Benefits consultancy as a joint employer. Field v. Am. Mortg. Express Corp., 2011 U.S. Dist. LEXIS 84601 (N.D. Cal. Aug. 2, 2011).

Plaintiff Field was employed by Defendant American Mortgage Express. However, under American Mortgage’s contract with co-defendant Gevity HR, Gevity was responsible for administering all Human Resources functions, including recruitment, the development of workplace resources for recruited employees, and payroll. A Gevity employee served as American Mortgage’s human resources director. Further, the contract between the two parties expressly stated that employees recruited and employed pursuant to this program would be jointly employed by both entities. 

Plaintiff Field sued both entities under various California Labor Code provisions. Defendant American Mortgage failed to appear in the case, and defendant Gevity (despite the contractual language) moved for summary judgment as to its employer status. Applying the California Supreme Court’s recent decision in Martinez v. Combs, 49 Cal. 4th 35 (2010), Judge Edward Chen of the Northern District of California rejected Fields claim against Gevity because Field could not establish that: 1) Gevity exercised control over plaintiff’s wages, hours or working conditions; 2) Gevity suffered or permitted Field to work; or, 3) that Gevity engaged plaintiff. The Judge dismissed Gevity’s role as “ministerial,” observing that the material decisions relating to Fields’ employment all were made by American Mortgage executives, and rejected Field’s assertion that he, executive director of American Mortgage’s Western Division Wholesale Lending operations, was required to “consult with or obey” Gevity’s employee with respect to human resources matters. 

Fields is a favorable decision for all employers, and for outside human resources consultants and PEOs in particular. Of course, employers must remain vigilant in analyzing the control their organization exerts over sub-contractors, independent contractors and the employees of any other organization.