By Michael Kun
You run a supermarket. You contract with a janitorial company to come in every night to clean the aisles after you close.
You run an ad agency. You retain a contractor to handle your mailroom.
You run a law firm. You bring in a company to update the books in your law library.
You run a hotel. You contract with a van service to shuttle your guests to and from the airport.
Whatever business you are in, you are bound to enter into contracts with vendors to provide a variety of services.
And, except where they subcontract that work out, each of those vendors uses its employees to fulfill its contract with you.
You may recognize the vendor’s employees from seeing them in your workplace. You may even know a few by name and say hello to them, or ask them about their weekend.
You didn’t hire them, you don’t pay them, you don’t supervise them. Yet, when they file suit against your vendor claiming they were not paid for all of the time they worked, or that they were not paid overtime, or they were not otherwise treated in compliance with the law, don’t be surprised to see that they (and their lawyers) sue your company, too, contending that you are their “joint employer.” And that you are responsible for paying them the wages they claim they were not paid. Penalties, too. And don’t forget attorney’s fees.
Yes, the person who you occasionally wave to in the hallway or exchange holiday greetings with is now claiming that you are his employer.
The “joint employer” theory is by no means a new one. It has been used by plaintiffs and their lawyers for years to bring more – often “deep pocket” — defendants into lawsuits and leverage larger settlements than they might otherwise be able to obtain from their actual employers.
The little company that employs them may not have much money. But the companies it contracts with? Your company? That may be very different, and therein lies the appeal of suing you.
While the tests for whether a company is a “joint employer” vary in different jurisdictions and under different laws, they all essentially turn on one element – control. Do you control the individual’s work or the manner in which it is performed –or are you merely (and appropriately) concerned with the end result?
Directing an individual which aisles to clean or how to do so is dangerous; reporting a concern to the vendor about the quality of the work performed is not. The former goes to the manner in which the work is done; the latter, to the end result.
In order to best position yourself to avoid or defend a claim that a vendor’s employees are also your employees, you should review your contracts and your relationships with your vendors. And you should take steps to ensure that the relationships are focused on the end result alone. Ideally, among other things, you would be able to do the following:
1) Your contract with the vendor should provide very clearly that the persons the vendor hires are its employees, that it is obligated to pay them in compliance with the law and to otherwise comply with the law as it relates to them, and that you are interested in the end result alone.
2) Don’t be involved in any way in the vendor’s hiring of its employees. That’s their responsibility.
3) Don’t be involved in any way in the vendor’s paying of its employees. That’s their responsibility.
4) Don’t be involved in any way in disciplining the vendor’s employees. If there are concerns, report them to the vendor and let the vendor address them.
5) Don’t be involved in any way in the vendor’s termination of its employees.
6) Don’t supervise or direct the vendor’s employees. That should come from the vendor.
7) Don’t give the vendor’s employees clothing or badges with your company’s name or logo on it. And if the vendor gives its employees such items, tell it to stop.
8) Don’t give the vendor’s employees business cards with your company’s name or logo on them, or anything else that would identify thems as doing anything other than working for a vendor that provides services to you.
9) Don’t give the vendor or its employees any tools with which to perform work. No computers, no pencils, no pads, no mops, no brooms, no hammers or nails.
10) Don’t give the vendor’s employees offices or desks.
11) Don’t keep files on the vendor’s employees. No personnel files. No logs of who worked when.
12) Don’t include the vendor’s employees in meetings with your employees. Remember, they’re not your employees. Don’t treat them like they are.
13) Don’t require your vendor to use specific employees.
This is not to suggest that you should stop saying hello to the vendor’s employees when you see them, or asking how their weekend was. But if you want to talk about the quality of the services they are performing, talk with the vendor, not its employees.
Taking such steps may not prevent you from being sued under a “joint employer” theory, but it should enable you to make a strong argument that the theory does not apply to you. And depending on the vendors you use and the number of persons they employ, that could be worth a small fortune.