Allegations of joint employment under the FLSA and other employment laws typically flow from control allegedly exercised by the purported “joint employer” over the primary employer and/or its employees. In a recent opinion rejecting such allegations, Magistrate Judge Joan Azrack of the United States District Court for the Eastern District of New York granted summary judgment in favor of New York City against a group of home attendants employed by a not-for-profit agency who provided personal care services to City residents pursuant to a model contract required by Medicaid regulations. Godlewska v. HDA, 2013 U.S. Dist. LEXIS 350 (E.D.N.Y. Jan. 2, 2013).
In rejecting the home attendents’ claim, the Court first analyzed whether a “formal” employment relationship with the City existed. Rejecting that theory, the Court turned to the generally established factors utilized by courts to assess whether “an entity that lacks formal control . . . exercise[s] ‘functional control’ over workers [under the FLSA.]” – “(1) whether the purported joint employer’s premises and equipment were used for plaintiffs’ work; (2) whether plaintiffs belonged to an organization 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 the purported joint employer’s process of production; (4) whether responsibility under the contracts could pass from one vendor to another without material changes; (5) the degree to which the purported joint employer supervised plaintiffs’ work; and (6) whether plaintiffs worked exclusively or predominantly for the purported joint employer.
Although the City maintained contractual rights and /or obligations to audit the agency, required the agency to hire certain positions (e.g., administrative personnel and public assistance recipients), reimbursed the agency for wages paid to the home attendants, and directed the agency to remove home attendants from personal care services assignments, the Court ruled that the home attendants failed to establish a joint employment relationship. The Court noted that the City did not have the power to hire or fire home attendants, and that the City only required the agency to staff certain positions (rather than controlling or dictating the hiring of specific individuals for any position). Moreover, while the City could request a home attendant’s removal from an assignment, it could not terminate the attendant’s employment with the agency. The Court also explained the audit function was tantamount to “quality control”—as opposed to actual control—necessary to ensure personal care services were delivered in accordance with applicable laws and regulations. While some of the factors militated in favor of joint employment, “the sum of their satisfaction . . . is that plaintiffs (1) worked full-time for an agency that can contract with only the City and (2) might follow their patients to other such agencies.” Under the overarching “economic realities” test, the Court deemed this scenario insufficient as a matter of law to support a joint employment finding.
Godlewska demonstrates the limit some courts place on “joint employer” claims under the FLSA, in that the Court rejected Plaintiffs’ attempt to impute the requirements imposed by the Medicaid regulations to the City, despite the control inherent in the City’s discharge of its obligations under those regulations. With that said, the Plaintiffs’ bar will continue to utilize joint employment and other theories to find “big pockets” for class claims, so businesses must constantly analyze their practices. Further, industry employers must prepare for the potential drastic narrowing of the “companionship” exemption to overtime applicable to many agency-employed home attendants.