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Audit Your Contractors – They May Cause You To Be Liable for Their Employees

Posted by Eric Parzianello on June 2, 2015

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Once a company is found to be a joint employer with its contractor, it is jointly liable for any wage violations committed by the contractor. In a May 28, 2015, Florida federal court decision, a company was held liable as a “joint employer” for improper payments its contractor required from its employees.  The essential question at issue in the case was whether the workers are dependent on the company as an economic reality.

In Garcia-Celestino vs. Citrus Consolidated, the plaintiffs alleged that a citrus grower’s contractor demanded that they pay back a portion of their wages in exchange for not reporting them as illegal immigrants and having them deported to Mexico. The workers said the contractor forced about 200 workers to pay over $100,000 during three harvest seasons.

The United States District Court of the Middle District of Florida balanced several factors in making a determination as to whether the grower was a joint employer.  If a company makes decisions such as: (1) for whom and how many employees to hire; (2) how to design the employees’ management structure; (3) when the work day begins; (4) when the laborers shall start and stop their work throughout the day; and (5) whether a laborer should be disciplined or retained, it is likely a joint employer.

Joint employer status can also be found if the company supervises workers regardless of whether orders are communicated directly to the worker or indirectly through the contractor.  The authority to hire, fire, or modify the employment conditions of the workers and the extent of the company’s involvement in the payroll procedures and wage payments is also considered.

The court found that the workers provided an integral service for the grower, indirectly but extensively supervised the workers and was also directly involved in payroll practices thereby affecting Plaintiffs’ pay.  The grower therefore will be liable in an amount to be determined for the adverse effect on the workers’ wages and possible Fair Labor Standards Act (“FLSA”) violations.  A full copy of the decision can be found at my firm’s website:   Garcia-Celestino vs. Citrus Consolidated.

Lesson for companies working with contractors:  audit their employment practices or ensure that you don’t cross decisional control lines and risk being considered a joint employer.

Eric Parzianello
eparzianello@hspplc.com
313-672-7300

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