January 25, 2017: Employers will no longer be able to skirt their responsibilities to employees through layers of subcontracting, thanks to a recent ruling from the Court of Appeals for the Fourth Circuit in Salinas v. Commercial Interiors. The case began a few years ago when several drywall workers sued Commercial Interiors and a subcontractor for failing to pay overtime, represented by the Public Justice Center and James & Hoffman. While the workers succeeded in winning back wages from the subcontractor, Commercial Interiors convinced the lower court that they weren’t the workers’ employer. Not content to let them off the hook, we appealed the case. In October, the PJC’s Sally Dworak-Fisher argued before the court that Commercial Interiors jointly employed the drywall workers together with its subcontractor. As the employer, then, Commercial Interiors was also responsible for failing to pay overtime and in violation of the Fair Labor Standards Act.
The court agreed, establishing a new standard to guide courts in deciding whether two entities are joint employers. The opinion specifically rejected a standard commonly used in this circuit, because the test focused too narrowly on control over the worker. Instead, the Court reasoned that that judges should consider the nature of the relationship between the two entities and whether or not they are “completely disassociated.”
Applying its new standard to the case, the Court found that Commercial Interiors was clearly a joint employer and accountable for the unpaid overtime. We are thrilled with the opinion, which clarifies an issue that has become increasingly important in today’s outsourced economy. The decision means that companies that choose to fracture their workforce through multiple contractors will have to take responsibility for ensuring that workers are paid properly.
Thank you to the team at James & Hoffman, who co-counseled this case with us through our Litigation Partnership: Darin Dalmat, Ryan Griffin, Kathy Krieger, and Stephanie Bream.