SLG Successfully Defends General Contractor in FLSA Overtime Case

FEDERAL Court Rules in Favor of General Contractor in FLSA Overtime Case

In early 2015, SLG attorney Christina L. Feyen successfully defended a general contractor (“GC”) in the Southern District Court of Florida against FLSA claims for overtime asserted by employees of the project’s concrete shell subcontractor. Plaintiffs brought their FLSA claims on a “joint employer” theory of liability. Under that theory, a GC could be liable to a subcontractor’s employee for FLSA violations if that employee is found to be “economically dependent” on the GC.

The U.S. District Court granted summary judgment for the GC, finding that the Plaintiffs were not economically dependent enough on the GC to hold the GC liable as a joint employer. Just as important as the end result in this case are the facts that led the Court to this decision. The U.S. District Court utilized the eight (8) factor test endorsed by the 11th Circuit Court of Appeals to determine whether the GC was a joint employer of Plaintiffs, which factors are analyzed below.¹ [To read the U.S. District Court’s full opinion, click here]

     1.                     The nature and degree of control of the workers:

Control arises when the alleged joint employer goes beyond general instructions and assigns specific tasks, assigns specific workers or takes an overly active role in the oversight of the work. A GC should not assign specific workers to specific tasks; dictate how workers reach their work goals; get involved in subcontractor’s management structure; or communicate directly with sub’s workers in order to avoid a finding of joint employment.

     2.           The degree of supervision, direct or indirect, of the work:
Supervision of the work includes overseeing the work and providing direction on a regular or daily basis. Therefore, a GC should not tell or advise a sub’s workers how to do their work in order to avoid joint employment liability. Also, checking blue prints, directing which part of the building to work on and setting the project schedule will likely not be considered indicative of joint employment.

     3.          The right, directly or indirectly, to hire, fore or modify the workers' employment conditions:
A GC should not be involved in a subcontractor’s hiring process (no background checks, no say as to specific workers on job site, etc.) Even if a GC reserves the right to remove a worker from the job site, if it does not have the power to actually fire a worker from the subcontractor’s company, then it will likely avoid a finding of joint employment.

     4.          The power to determine the workers' pay rates or methods of payment:
A GC should not determine the hourly pay rate of subcontractor’s employees or provide insurance benefits to them in order to avoid joint employment. However, merely paying the subcontractor based on its invoices will not impute joint employment.

     5.          Preparation of payroll and the payment of wages:

A GC should not have a hand in preparing subcontractor’s payroll or in helping to pay wages. Although a subcontractor may depend on GC’s payment of invoices to pay the payroll, on some level all businesses are dependent on customers paying invoices, so this is not indicative of joint employment.

     6.         Ownership of the facilities where work occurred:
Even  if a GC does not own the land upon which construction will take place but its role and purpose is to oversee and control the construction of buildings on such land, then this factor is neutral in the determination of joint employment – it favors neither the GC nor the subcontractor.

     7.          Performance of a specialty job integral to the business:
If a worker is involved in constructing an integral part of the project, such as the shell, then the work will be considered integral to the GC’s overall construction of the project and a Court will likely find such facts favorable to joint employment.

     8.          Investment in equipment and facilities:
If a GC provides a majority of the materials, tools and/or supplies equipment for the subcontractor’s use, it is likely to weigh in favor of joint employment because the subcontractor is depending on the GC in order to perform the work. To avoid such a finding, do not provide tools, equipment or supplies.

CONCLUSION

It is imperative that GCs and Subcontractors appreciate the facts and circumstances of their downstream relationships that may trigger “joint employment” and take steps to rectify any practices that could impute joint employment liability for an FLSA overtime claim.

1 This analysis only applies to private projects or projects where there are no Davis Bacon requirements or applicable local responsible wage ordinances in effect for the project. In such instances, the GC’s liability for a worker’s unpaid wages and overtime may be dictated by applicable state or federal law. 

Christina L. Feyen, Esq.

The Soto Law Group, P.A.

2400 East Commercial Blvd., Suite 400

Fort Lauderdale, FL  33308
christina@sotolawgroup.com
www.sotolawgroup.com

TEL:  954-567-1776

FAX:  954-567-1778

       

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