10.6092/issn.1561-8048/11204
The joint-employer doctrine in the United States is as fissured as the economy itself. As this paper’s brief survey of the different joint-employer standards used in the U.S. shows, the diverse set of work laws and governing authorities involved in workplace disputes have led to an unpredictable and confusing set of joint-employer standards.Although most of these standards share similarities, there are numerous differences based on the statute involved, whether the dispute is brought under federal or state law, which federal court is hearing the case, and which political party controls a relevant agency. Moreover, thanks in large part to a labor law action against McDonald’s, the joint-employer doctrine has become a politically charged issue, leading several federal agencies recently to change their approach to the question. As a result, businesses and workers cannot be certain that the relevant joint employer standard that exists today will be the same one that applies later. In short, joint employment in the U.S. consists of a complex set of standards that lack clarity and predictability, imposing costs on businesses and workers alike.
application/pdf
1561-8048
11204
1
en
Jeffrey M. Hirsch
Italian Labour Law e-Journal
Statutory interpretation
Joint Employment in the United States
Text.Serial.Journal
https://illej.unibo.it/
13
Theme
2020-07-20
2020-06-23
2020-07-20
2020-09-15
55-69
ILLeJ
Jeffrey M. Hirsch
2020/07/20
10.6092/issn.1561-8048/11204
55
University of North Carolina School of Law
1561-8048
1
Statutory interpretation
en
69
Joint Employment in the United States
https://illej.unibo.it/article/download/11204/11365
13
Joint Employment in the United States                                             Italian Labour Law e-Journal
Jeffrey M. Hirsch                                                                        Issue 1, Vol. 13 (2020)
jmhirsch@email.unc.edu                                                                         ISSN 1561-8048
                                                                https://doi.org/10.6092/issn.1561-8048/11204




                  Joint Employment in the United States
                                         Jeffrey M. Hirsch*

 1. Introduction. 2. Fissured Work, Fissured Doctrine. a. The Fragmented System of
 American Work Laws. b. The Common-Law Approach to Joint Employment. c. State Court
 Joint-Employer Standards. 3. Politics and Changing Joint-Employment Standards. a.
 Changing Joint Employment Standards Under Federal Labor Law. b. Changing Joint
 Employment Standards Under Federal Wage and Hour Law. 4. Conclusion.



                                                 Abstract

     The joint-employer doctrine in the United States is as fissured as the economy itself. As this
     paper’s brief survey of the different joint-employer standards used in the U.S. shows, the diverse
     set of work laws and governing authorities involved in workplace disputes have led to an
     unpredictable and confusing set of joint-employer standards. Although most of these standards
     share similarities, there are numerous differences based on the statute involved, whether the
     dispute is brought under federal or state law, which federal court is hearing the case, and which
     political party controls a relevant agency. Moreover, thanks in large part to a labor law action
     against McDonald’s, the joint-employer doctrine has become a politically charged issue, leading
     several federal agencies recently to change their approach to the question. As a result, businesses
     and workers cannot be certain that the relevant joint employer standard that exists today will be
     the same one that applies later. In short, joint employment in the U.S. consists of a complex set
     of standards that lack clarity and predictability, imposing costs on businesses and workers alike.



     Keyword: Joint employer; Labor law; Employment law; Employment discrimination; Statutory
     interpretation.




 1. Introduction.

    The classic employment relationship is a relatively simple one to identify and define, with
 a single employer that employs a clearly defined group of employees. Yet, that simple
 relationship has never been the only model and as a result, for long as there have been laws
 regulating the workplace, there have been disputes regarding which parties are part of a


 *Geneva Yeargan Rand Distinguished Professor of Law, University of North Carolina School of Law. This
 Article benefitted from the extraordinary research assistance of Dakota Lipscombe. This article has been
 submitted to a double-blind peer review process.
Jeffrey M. Hirsch                                                                     Italian Labour Law e-Journal
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                                                                                                    Section: Theme


formal employment relationship1. These questions are important because workers only have
statutory rights if they are considered formal employees and a hiring business can only face
liability if they are classified as a statutory employer.
    Although these classification issues are not new, they have captured the public’s attention
in recent years, as the gig economy has highlighted and exacerbated this long-standing issue.
Much of the attention has been on whether to classify gig workers as employees or
independent contractors. But there is a related question that is no less important, despite
garnering less attention: identifying who is an employer.
    As the economy has become increasingly “fissured”2 through the use of arrangements
such as subcontracts and franchise agreements, questions about which businesses should be
considered statutory employers have also increased. Although fissured workplaces are not
new, they have become more prevalent and prominent as technology has permitted
businesses to influence the work of employees who are officially employed by other firms3.
One recent estimate states that 13.8 United States employees arguably provide work for the
benefit of multiple employers, which is approximately 11.9% of the entire civilian workforce4.
    Although there are many types of fissured business relationships, franchises provide an
apt illustration of this issue, as they are both a significant portion of the U.S. economy and
their business model is ripe for employer classification questions. As of 2018, the franchise
industry employed almost 9 million individuals, or 5.7% of all private civilian jobs in the U.S.5
In most franchise relationships, a franchisor retains some level of control over the
franchisee’s operations for quality control and other reasons. As technology has advanced,
the level of control that franchisors are able to exert has increased substantially. Yet that very
control puts franchisors at a higher risk of being classified as an employer of the franchise
employees and liable for violations of work laws.
    Much like its impact in muddying the classification of an “employee”6, technology is
increasingly influencing the classification of employers as well. For instance, monitoring
technology has been rapidly advancing in recent years,7 which enhances a franchisor’s ability

1 See, e.g., American Bemberg Corp., in National Labor Relations Board, 1940, 23, 623 - 628 (NLRB relying on joint
employment concept to decide unit determination case); Bell Oil & Gas Co., in National Labor Relations Board,
1936, 1, 562 - 588 (NLRB decision referring to joint employment).
2 See, Weil D., The Fissured Workplace: Why Work Became Bad for So Many and What Can Be Done to Improve It,

Harvard University Press, Harvard, 2014, 3-4, 94-95 (describing “fissured” workplaces in workers perform
services for businesses that do not directly employ them, including subcontracting and franchising).
3 See infra (n.) 13-23.
4 McNicholas C., Shierzholz H., Comments Regarding the Department of Labor’s Proposed Joint Employer Standard, in

Economic Policy Institute, 2019, June 25, (noting that estimate—which attempts to count workers at temp agencies
(2.94 million), contract firms (2.02 million), and franchises (8.85 million) is larger than what they argue is
Department of Labor’s artificially low estimate of contingent workers, but smaller than other estimates),
https://www.epi.org/publication/epi-comments-regarding-the-department-of-labors-proposed-joint-
employer-standard/. The percentage was based on the estimated 2018 U.S. civilian labor force of 155.76 million
workers. See, U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from the Current
Population Survey, https://www.bls.gov/cps/cpsaat01.htm.
5 See McNicholas C., Shierzholz H., n. (4).
6 See Hirsch J. M., Future Work, in University Illinois Law Review, 2020, 264, 889- 925 (citing Cotter v. Lyft, Inc.,

60 F. Supp. 3d 1067, 1081 (N.D. Cal. 2015) (noting that trying to apply employee classification law to gig
workers is like being “handed a square peg and asked to choose between two round holes”)); Hirsch J. M.,
Seiner J. A., A Modern Union for the Modern Economy, in Fordham Law Review, 86, 2018, 4, 1727, 1739-1745
(describing challenges faced by gig and other contingent workers, particularly Uber drivers).
7 Ajunwa I., Crawford K., Schultz J., Limitless Worker Surveillance, in California Law Review, 2017, 105, 735

(describing workplace monitoring).

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to observe the smallest details of a franchisee’s operations and require or incentivize the
franchisee to implement certain workplace practices. The most prominent example of this
trend is McDonald’s, perhaps the most well-known franchise in history8.
    In 2014, the General Counsel of the National Labor Relations Board (NLRB) issued a
complaint against the McDonald’s corporation for violations of the National Labor Relations
Act (NLRA).9 The complaint—which may be the largest claim ever litigated at the NLRB—
arose out of “Fight for $15” protests, in which workers and their advocates pushed for a $15
per hour minimum wage for fast-food workers.10 In reaction to these protests, numerous
employees were fired.11 The General Counsel alleged that the terminations violated the
NLRA and sought to hold not only the franchisees—the official employers of the fired
employees—but also corporate McDonald’s accountable12. According to the General
Counsel, McDonald’s should have been considered a “joint employer” along with the
franchisees, and liable for violations of the NLRA, because of the control that it exerts over
franchise’s working conditions. Among the types of McDonald’s alleged control was its use
of technology to set franchisees’ labor needs based on monitoring of their sales, inventory,
labor costs, and employee work performance13. Using this information, as well as software
and consultants, McDonald’s set the number of employees working on a given shift and
employees’ work schedules; required some duties to performed in specific ways or during
specific times; monitored wage reviews; screened applicants; and, on occasion, prevented
franchisees from hiring certain applicants.14 McDonald’s challenged some of these
allegations, but admitted to others as part of its quality control measures15. And McDonald’s
even seemed to admit that it worked with franchisees in responding to the Fight for $15
protests—actions that led to the General Counsel’s unfair labor practice charges16.
Ultimately, however, following a high-profile political battle and political changes in the
NLRB’s leadership, a new General Counsel reached a controversial settlement with
McDonald’s that did not recognize the franchisor as a joint employer; an administrative law
judge initially rejected the settlement, but a newly constituted NLRB later reversed that ruling
and approved the settlement17.


8 Moreover, in 2016, the fast-food industry made up over 45% of U.S. franchises and is the largest contributor
to the U.S. Gross Domestic Product. See International Franchising Association Education and Research
Foundation (IFA), The Economic Impact of Franchised Business: Volume IV, 2016, I-8, I-12,
https://www.franchise.org/sites/default/files/Economic%20Impact%20of%20Franchised%20Businesses_V
ol%20IV_20160915.pdf.
9 NLBR Office of the General Counsel Issues Consolidated Complaints Against McDonald’s Franchisees and Their Franchisor

McDonald’s, USA, LLC as Joint Employers, in National Labor Relations Board, 2014, 19,
https://www.nlrb.gov/news-outreach/news-story/nlrb-office-of-the-general-counsel-issues-. (consolidated-
complaints-against (describing 13 complaints, involving 78 unfair labor practice charges, filed against
McDonald’s and some of its franchises as a joint employers).
10 See Kanu H. A., McDonald’s Gets a Win in Labor Case Backed by Fight for $15, in Bloomberg Law, 2019, December

12.
11 See NLRB General Counsel Issues Consolidated Complaints, supra 9.
12 Id.
13 Id.
14 Elejalde-Ruiz A., Why Should McDonald’s be a Joint Employer? NLRB Starts to Provide Answers, in Chicago Tribune,

2016, March 10 (noting requirements about staffing levels, when to clean bathrooms, and where to place
completed orders).
15 Ibid.
16 Ibid.
17 See Kanu H. A., n. (10).



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    McDonald’s has faced other joint-employer claims alleging the existence of similar types
of technology aided control. For instance, in one lawsuit employees claimed that McDonald’s
labor software system failed to properly credit overtime pay and hindered employees’ ability
to take state-mandated breaks18. To support their claim that McDonald’s was a joint
employer, the employees cited some of the same evidence used by the NLRB’s General
Counsel, as well as allegations that its labor system improperly classified work hours and
controlled working conditions such as where employees should be positioned during their
shifts.19 The federal Ninth Circuit refused to find that the software was enough to classify
McDonald’s as an employer, in part out of a fear that such a ruling would expand liability
too broadly.20 Similar claims based on the use of software to control working conditions have
failed against major franchise companies, like Domino’s Pizza21. On the other hand, other
technology-based allegations have seen more success, such as a claim that DIRECTV was a
joint employer, along with one of its contractors, of a group of technicians22. In that case,
the employees were allowed to go to trial with their argument that DIRECTV should be
considered a statutory employer in part because of the level of control it exerted via its
centralized work-assignment system23. Although these sorts of employment questions will
continue to be fact driven and face hurdles in court24, the degree to which technology allows
a company like McDonald’s to control the work of employees will only increase in the future,
producing more and stronger claims that such businesses are statutory employers.
    As technology has advanced and the economy has become increasingly fissured, the
problems with identifying employers has gained added prominence—and controversy. The
NLRB General Counsel’s case against McDonald’s was the focal point and catalyst of many
of the debates regarding this topic in recent years. As the General Counsel pursued his claim
against McDonald’s, he was simultaneously advocating for a broader “joint employment”
standard under the NLRA, which the Obama NLRB ultimately adopted. However, after the
2016 election and the resulting changes to the Board’s membership, it has reverted back to
its earlier, more restrictive standard25.
    The flip-flopping at the NLRB is extreme, but highlights the degree to which joint
employment is viewed as an important issue in the American economy and government. Yet
it also illustrates the doctrine’s lack of coherence and stability. Joint employment standards
in the U.S. are complex and lack predictability, which is emblematic of the country’s work
law more generally. In other words, joint employment is a doctrine that is as fissured as the
American economy itself.

18 Salazar v. McDonald’s Corp., 944 F.3d 1024 (9th Cir. 2019).
19 Ibid. at 1028.
20 Ibid. at 1032 (expressing concern that “the IT specialist, the accountant, and the lawyer would become joint

employers”).
21 In re Domino’s Pizza Inc., 2018 WL 4757944, at *4 (S.D.N.Y. Sept. 30, 2018) (challenging wage software

program, called “PULSE” that led to franchisees paying $1.5 million in settlement). However, the New York
State Attorney General’s suit against Domino’s for violations of state law as a joint employer just survived a
summary judgment motion and is currently scheduled for trial. People v. Domino’s Pizza, Inc., 2020 WL
2747803 (N.Y. Sup. Ct. May 27, 2020); see also Von Wilpert M., States with Joint Employer Shield Laws are Protecting
Wealthy Corporate Franchisers at the Expense of Franchisees and their Workers, in Economic Policy Institute, 2018, 2
(describing New York suit against Domino’s), https://files.epi.org/pdf/142015.pdf.
22 Hall v. Directv, LLC, 846 F.3d 757 (4th Cir. 2017).
23 Ibid. at 773 (reversing district court’s dismissal of joint-employer claim).
24 See infra (n.) 32.
25 See infra (n.) 68-71.



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2. Fissured Work, Fissured Doctrine

   A central feature of U.S. labor and employment law is its decentralized nature. Rather
than using a unitary labor statute or agency, the American workplace is governed by
numerous federal, state, and local laws which, at times, can apply simultaneously to the same
dispute26. This plays out in the joint-employment context in various ways. Typically, the
contours of the employment relationship fall under state common law, usually pursuant to
agency law concepts27. But because of the diverse set of regulatory bodies, there is less
continuity than one might expect. As a result, the joint-employment standard can, and often
does, differ depending on the legal claim, type of employment, and possibly geography28.
Moreover, as McDonald’s dispute with the NLRB highlights, even under a single statute and
agency, the standard can change over time.


a. The Fragmented System of American Work Laws.

   The complex web of joint-employment standards is largely the product of two different
aspects of American labor market regulation. The first is the federalist structure of the U.S.—
one in which individual states retain a great deal of authority to legislate, including in the
workplace. The other is that the U.S., unlike many other countries, does not have a unified
workplace regulatory body, either at the federal or state level. Thus, rather than a single labor
authority, there is an alphabet soup of agencies that govern various labor and employment
laws29. As a result, it can be quite difficult to keep track of the various rules and means of
enforcement.
   Despite the number of laws and enforcing agencies, most major statutes regulating the
workplace have ways to hold multiple businesses liable in a given dispute. There are
variations in the doctrines or terms used30, but the most common - and the one that generates
the most questions and controversy - is the joint-employment doctrine. This doctrine allows
a court or agency to find a joint employer liable for remedying either its own actions or being



26 See Hirsch J. M., Revolution in Pragmatist Clothing: Nationalizing Workplace Law, in Alabama Law Review, 2010, 61,
1025, 1038-49 (describing and criticizing fragmented system of workplace regulation in the U.S.).
27 Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 518, 524, 1992 (holding that courts should use common-law

employment classification when statute does not specifically define “employee”).
28 See Rubinstein M. H., Employees, Employers, and Quasi-Employers: An Analysis of Employees and Employers Who

Operate in the Borderland Between an Employer-and-Employee Relationship, in University of Pennsylvania Journal of Business
Law, 2012, 14, 605, 647-649 (noting different joint-employment standards under the Family and Medical Leave
Act, Rehabilitation Act, and Title VII of the Civil Rights Act).
29 Some major federal agencies that have the power (although not always exclusive power) to enforce private-

sector labor and employment statutes include the Department of Labor, which enforces the Fair Labor
Standards Act (FLSA), Family and Medical Leave Act (FMLA), and several other statutes; Occupational Safety
and Health Administration, which enforces the Occupational Safety and Health Act (OSHA); National Labor
Relations Board, which enforces the National Labor Relations Act (NLRA); and Equal Employment
Opportunity Commission, which enforces Title VII of the Civil Rights Act, Americans with Disabilities Act
(ADA), Age Discrimination in Employment Act (ADEA), and Equal Pay Act (EPA).
30 Lihli Fashions Corp. v. NLRB, 80 F.3d 743, 748 (2d Cir.1996) (discussing difference between alter ego and

single employer doctrines under the NLRA); Ferrara v. Oakfield Leasing Inc., 904 F. Supp. 2d 249, 260-61
(E.D.N.Y. 2012) (discussing single employer doctrine under ERISA as distinct from joint employer doctrine).

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jointly and severally liable for its actions and those of the other joint employer31. But there is
no single standard for finding joint employment. Moreover, there has been much criticism
that many of the various joint-employment standards used by courts fail to adequately
apportion liability to companies that are involved in work law violations32.
   Because of the multiple work law statutes and governing bodies, joint employment is
often measured differently, depending on the claims made in a given case. Moreover, even
under a specific statute, the doctrine is not stable. Joint employment, like other employment
classification issues, has always been a topic that changes at times based on the political party
in charge. But this has been especially true over the past decade as the joint-employer
standard became a politically charged and relatively high-profile topic.33 Adding to these legal
problems is the increased adoption of emerging technologies, which has made the joint-
employment question ever more relevant34. As technology allows businesses, like franchisors,
to exert more control over work, defining who the employer is becomes more difficult35. At
the same time, technology makes the answer to this question increasingly important, as
workers’ rights become jeopardized by the fissured labor market.


b. The Common-Law Approach to Joint Employment.

    There are too many different joint-employer standards in the U.S. to fully examine in this
article, but an exploration of some of the primary ones is illustrative. Although there is
significant variety among these standards, the starting point for most is the common-law
conception of the employment relationship. Because most workplace statutes define the
employment relationship in a uniquely unhelpful and circular manner, courts have been left
to their own devices to determine when employment exists36. Following Supreme Court
precedent, which is derived from agency law, courts have long relied upon assorted multi-
factor tests to determine whether a business’ influence over a worker is sufficient to declare
an employment relationship37. Yet this common theme glosses over a great deal of ambiguity

31 Compare Torres-Negron v. Merck & Co., Inc., 488 F.3d 34, 41 No.6 (1st Cir. 2007) (holding, in discrimination
case, that “a finding that two companies are an employee’s ‘joint employers’ only affects each employer’s liability
to the employee for their own actions, not for each other’s actions”), with Virgo v. Riviera Beach Assocs., Ltd.,
30 F.3d 1350, 1362–63 (11th Cir. 1994) (finding, in discrimination case, joint employer to be jointly and severally
liable based on state agency law).
32 See, e.g., Glynn T. P., Taking the Employer Out of Employment Law? Accountability for Wage and Hour Violations in

an Age of Enterprise Disaggregation, in Employee Rights and Employment Policy Journal, 2011, 5, 1, 201, 212-26 (critiquing
various current and proposed standards).
33 In recent years, business groups have been especially focused on advocating narrow joint-employment

standards. See, e.g., U.S. Chamber of Commerce, Opportunity at Risk: A New Joint-Employment Standard and the
Threat to Small Business (2015),
https://www.uschamber.com/sites/default/files/documents/files/joint_employer_standard_final_0.pdf.
34 See supra (n.) 18-23.
35 In addition, the lack of a single geographic location and enhanced flexibility with gig work and other

technology influenced industries makes defining the employment relationship more difficult. See Hirsch J. M.,
Seiner J. A., A Modern Union for the Modern Economy, in Fordham Law Review, 2018, 86, 4, 1727, 1744.
36 See, e.g., infra (n.) 38.
37 See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 518, 323, 1992 (establishing common-law “right-to-control”

test used for the “circular” definition of the employment relationship in ERISA and most other workplace
laws); see also Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440, 447, 2003 (holding that Congress’
failure to define terms, such as the employment relationship, “often reflects an expectation that courts will look

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and churn that occurs when different adjudicators during different time periods try to
determine joint employment under different statutory schemes.
    When relying up common law, most courts apply a set of factors similar to the ones
expressed by the federal Ninth Circuit in EEOC v. Global Horizons, Inc, an employment
discrimination case under Title VII of the Civil Right Act38. These factors - which center on
a purported joint employer’s “extent of control over the details of the work” of employees -
include:
    the skill required; the source of the instrumentalities and tools; the location of the work;
the duration of the relationship between the parties; whether the hiring party has the right to
assign additional projects to the hired party; the extent of the hired party’s discretion over
when and how long to work; the method of payment; the hired party’s role in hiring and
paying assistants; whether the work is part of the regular business of the hiring party; whether
the hiring party is in business; the provision of employee benefits; and the tax treatment of
the hired party39.
    Like most courts examining joint employment under Title VII and other statutes, the
court in Global Horizons refused to apply the broader “economic realities” test that had
typically been used for cases under the Fair Labor Standards Act (FLSA)40. Yet, there is still
a fair amount of variation even under Title VII, as different federal circuits have used a variety
of joint-employment standards for the same statute41. Moreover, the agency responsible for
enforcing Title VII and other federal employment discrimination statutes—the Equal
Employment Opportunity Commission (EEOC) - has suggested that it will promulgate a
new joint-employer rule that moves away from its current approach which emulates Obama-
era standards under the FLSA and NLRA; however, it is unclear what the new standard will
look like.42


c. State Court Joint-Employer Standards.

   Surveying all fifty states is well beyond the scope of this article, but a few examples will
help illustrate the variance among states’ application of the joint-employer doctrine to their



to the common law to fill gaps in statutory text, particularly when an undefined term has a settled meaning at
common law”).
38 915 F.3d 631 (9th Cir. 2019) (finding that fruit growers and labor contractor were joint employers of

immigrant orchard workers). Title VII shares the same circular definition as most other work law statutes,
although it also provides explicit coverage for employment agencies. See 42 U.S.C. § 2000e(b) (“The term
‘employer’ means a person engaged in an industry affecting commerce who has fifteen or more employees . . .
.”); ibid. § 2000e(c) (“The term ‘employment agency’ means any person regularly undertaking with or without
compensation to procure employees for an employer or to procure for employees opportunities to work for
an employer and includes an agent of such a person.”).
39 Ibid. at 638 (quoting Clackamas, 538 U.S. at 448, and Darden, 503 U.S. at 523-24).
40 915 F.3d at 638-39; see infra Section II.B.
41 Some circuits use a similar test as the Ninth Circuit. See, e.g., Faush v. Tuesday Morning, Inc., 808 F.3d 208, 214

(3rd Cir. 2015). Other circuits have used a “hybrid” test that merges elements of the common-law test control
test and the economic realities test. See, e.g., Butler v. Drive Auto. Indus. of Am., 793 F.3d 404, 408 No.3 (4th Cir.
2015). At least one circuit uses a version of the economic realities test. See Nischan v. Stratosphere Quality, LLC,
865 F.3d 922, 929 (7th Cir. 2017).
42 See Opfer C., Employer Group Wants Harmony Among “Joint Employer” Rules, in Bloomberg Law, Nov. 27, 2019.



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own work laws. As is the case within the federal system, states use a variety of standards that,
while related, can differ in meaningful ways.
    California has a well-earned reputation as a state with worker-friendly laws, and its
approach to joint employment is no exception. Thus, when enforcing its independent, state
work laws, California does not rely on federal standards to find joint employment. For
instance, California’s wage and hour law, similar to the federal FLSA, defines an employer as
one “who directly or indirectly, or through an agent or any other person, employs or exercises
control over the wages, hours, or working conditions of any person” 43. Befitting its pro-
worker reputation, California will consider a business a joint employer under three different
scenarios: under the state labor code, to “employ” means “(a) to exercise control over the
wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage,
thereby creating a common law relationship”44. The “exercise control” and “common law”
options are quite similar, in that they both focus on a business’ ability to control how various
aspects of how work is performed45. In addition, “to suffer or permit” is akin to the broader,
FLSA definition and will find joint employment based on a business’ “knowledge of and
failure to prevent the work from occurring”46. Allowing for any of these three standards to
establish joint employment sets California apart from virtually all other states, which generally
only has a single option.
    Other states, like New York, adopt joint-employer standards that largely follow similar
federal standards. In other words, a New York state wage and hour claim has traditionally
been analyzed under the same framework as a federal wage and hour claim under the FLSA 47.
However, recent federal changes to the FLSA joint-employer standard48 leaves open the
question whether states like New York will follow suit. Indeed, New York has recently sued
the federal Department of Labor over its new joint-employer rule and, as part of that suit,
successfully argued that it had standing in part because it would have to spend more resources
to review the new rule and create either revised or new enforcement guidance49.
    Another set of states take a more restrictive view of joint employment, even carving out
explicit exceptions for franchisors. Take, for example, North Carolina. In order to find joint
employment, the state typically requires: 1) an “employment contract[] . . . express or
implied” that is “between the [employee] and the [purported joint-employer]”; (2) the
purported joint-employer “control[ed] the details of the [employee’s] work”; and (3) “the
work the employee does at the relevant time is essentially the same for both employers”50. In

43 Salazar v. McDonald’s Corp., 944 F.3d 1024, 1029 (9th Cir. 2019) (quoting California Wage Order No. 5-2001,
§ 2(H)).
44 Ibid. at 1029-30 (holding McDonald’s control was related to quality control).
45 The main difference appears to be that one definition focuses on control over compensation and working

conditions while the other more on how the work is performed. See ibid. at 1029-30, 1032. Moreover, “control
over wage, hours, and working conditions” refers to day-to-day control over working conditions, as opposed
to measures that impact work in order to maintain quality control. See Martinez v. Combs, 231 P.3d 259, 277-79
(Cal. 2010).
46 Curry v. Equilon Enterprises, LLC, 233 Cal. Rptr. 3d 295, 311 (Cal. App. 2018).
47 See, e.g., In re Domino’s Pizza Inc., 2018 WL 4757944, at *4 (S.D.N.Y. Sept. 30, 2018) (applying federal Second

Circuit’s FLSA standard to New York Labor Law claim; People v. Domino’s Pizza, Inc., 2020 WL 2747803, at *11
(N.Y. Sup. Ct. May 27, 2020) (same).
48 See infra Section II.B.
49 New York v. Scalia, -- F. Supp.3d --, 2020 WL 2857207, at *11 (S.D.N.Y. June 1, 2020).
50 See McGuine v. Nat’l Copier Logistics, LLC, 841 S.E.2d 333, 339-40 (N.C. Ct. App. 2020) (discussing workers’

compensation claim).

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other words, “[j]oint employment occurs when a single employee, under contract with two
employers, and under the simultaneous control of both, simultaneously performs services
for both employers,” and the employee’s service for each employer is the same as, or is
closely related to, the employee’s service for the other51. These requirements, especially the
demand for simultaneous and closely related service for both employers, is quite narrow in
comparison to states like California and New York. In addition, a North Carolina statute
enacted in 2017 provides that franchisors cannot be considered the employer of a
franchisee’s employees “for any purposes”52—a remarkably broad exception that gives
franchisors carte blanche to control franchisee employees’ working conditions without any
liability under state law.
    This brief survey shows a fairly diverse, albeit related set of federal and state joint-
employer standards. This diversity is somewhat surprising given that the anchor for most
workplace laws is supposed to be the common-law employment relationship. But the
American federalist system, combined with its lack of centralized workplace regulations, have
led to this fragmented set of standards. A set of standards that makes it difficult for workers
and employers, especially those who cross state lines, to understand the exact contours of
their working relationships and the legal consequences that flow from them. Further
complicating matters is the fact that joint employment has become more of a political issue
in recent years. The result is further instability, even under a given law governed by a single
agency.


3. Politics and Changing Joint-Employment Standards.

   The joint-employer doctrine has been quite controversial over the last several years,
garnering more political attention then it perhaps ever has. Much of that controversy was
spurred by the NLRB General Counsel’s attempt to hold McDonald’s liable for retaliation
against franchisee employees for their participation in Fight for $15 protests53. What followed
included political arguments, ethics complaints, and attempts by politicians and agency
officials to protect (depending on their political affiliation) either workers or businesses,
especially franchisors. By way of example, as of 2018, eighteen states had enacted statutes
that expressly prevented employees of franchisees from being considered employees of a
franchisor—many of which were enacted recently54.
   The result of this turmoil is a flip-flopping of legal standards that has produced a lack of
clarity for employers and employees alike. As described in the previous section, the varying
joint-employer standards are already bewildering; the addition of politically motivated
changes creates even more confusion, as no one can be sure what rules will apply in the
future. This level of uncertainty is always problematic55, but it is particularly troubling at a


51 Ibidd. at 338 (N.C. Ct. App. 2020) (quoting Whicker v. Compass Grp. USA, Inc., 784 S.E.2d 564, 569 (N.C. Ct.
App. 2016)).
52 N.C. Gen. Stat. § 95-25.24A (“Neither a franchisee nor a franchisee’s employee shall be deemed to be an

employee of the franchisor for any purposes ...”).
53 See supra (n.) 9, 17.
54 See Von Wilpert, n. (21), at 3; 52.
55 See Hirsch J. M., (n.) 26.



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time when technology is making it easier for multiple businesses to influence the work of a
given group of employees. To illustrate this dynamic, the following sections provide a brief
description of the political back-and-forth that in recent years has changed the joint-employer
standard under two key American work laws-the NLRA and FLSA.


a. Changing Joint Employment Standards Under Federal Labor Law.

    Like most U.S. labor and employment laws, the statutory definition of “employer” under
the NLRA is completely circular and utterly unhelpful to anyone trying to classify a
business56. Thus, the NLRA is one of the laws that have traditionally used common-law
agency principles to classify employers57. These principles are typically analyzed through a
multi-factored “right-to-control” test58.
    For decades, the NLRB’s common-law approach to joint employment was stable, at least
on paper59. Eventually, however, complaints arose that the NLRB, while not officially
changing its approach, had gradually adopted a standard that improperly moved away from
the common law by requiring a joint employer to exert active, direct control over employees’
work rather than a mere right to control60. This led the Obama-era NLRB, pushed by the
General Counsel pursuing charges against McDonald’s, to adopt a new standard that allow
for indirect and more sporadic control61. Because this change was lumped together with the
backlash against the McDonald’s case—largely by those seeking to protect franchisors—
joint employment under the NLRA became a highly political issue, with many arguing that
the new standard jeopardized the entire franchise business model62.
    Much of the disagreement surrounding the NLRA’s joint-employment standard revolves
around the degree to which a joint employer’s influence over working conditions is direct
and active, as opposed to being more indirect or sporadic. The Obama Board’s justification
for its new joint employment standard in the 2015 case Browning-Ferris Industries of California,
Inc. was rooted in its belief that prior Boards had improperly required joint employers to
retain active and direct control over workers63. Instead, the Board concluded that joint
employment would be found pursuant to the common-law test’s focus on the right to control

56 29 U.S.C. § 152(2) (“The term ‘employer’ includes any person acting as an agent of an employer, directly or
indirectly ...”).
57 See supra Section I.B.
58 See supra (n.) 37.
59 See, e.g., N.L.R.B. v. Browning-Ferris Indus. of Pennsylvania, Inc., 691 F.2d 1117 (3d Cir. 1982); Laerco Transp. &

Warehouse, 269 N.L.R.B. 324 (1984); TLI, Inc., 271 N.L.R.B. 798, 1984.
60 Compare Browning-Ferris, Indus. of California, Inc., 362, in National labor relation board 1599, 1606-08, 2015

(arguing that new rule returned joint employment to original standard), with Hy-Brand Industrial Contractors, Ltd.,
365, N.L.R.B., 156, slip op. at 5-8, 2017 (arguing that Browning-Ferris was a new, improper standard), vacated 366,
N.L.R.B., No. 26, 2018.
61 Browning-Ferris, 362 N.L.R.B. at 1613; NLRB General Counsel Issues Consolidated Complaints, supra note 9.
62 See, e.g., Save Local Business Act, H.R. 3441, 115th Cong. § 1, 2017 (would reverse Browning-Ferris); Carvell S.

A., Sherwyn D., It Is Time for Something New: A 21st Century Joint-Employer Doctrine for 21st Century Franchising, in
American University Business Law Review, 5, 2015, 29 (predicting that expansion of joint employment under
Browning-Ferris would lead franchisors to either abandon franchises or enter into franchise agreements only with
larger franchisees); Gibson K., Should McDonald’s be Responsible for How its Franchises Treat Workers?, in Moneywatch,
Mar. 11, 2016 (noting argument that broad joint-employment standard could “undermine the entire franchise
concept”).
63 362 N.L.R.B., at 1608-09.



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working conditions64. Under Browning-Ferris, therefore, joint employment would exist if two
entities “share or codetermine those matters governing the essential terms and conditions of
employment”65. A joint employer needed only to “possess the authority to control
employees’ terms and conditions of employment”—it did not, as was previously the case,
need to actually “exercise that authority, and do so directly, immediately, and not in a ‘limited
and routine’ manner”66. Thus, a business could be a joint employer if it possessed either a
“direct or indirect” right to control work67.
   After the Trump Board was installed, the joint-employment standard was one of its early
targets. But its attempts to change the standard did not go smoothly. In 2017, the NLRB
attempted to reverse the Browning-Ferris standard in Hy-Brand Industrial Contractors, Ltd.68 That
case was later vacated because of a conflict of interest with one of the Board members69,
leading the Board to pursue the same aim via formal rulemaking instead70. The new standard,
promulgated in 2020, formalized the pre-Browning-Ferris analysis by requiring a joint employer
to possess actual control over working conditions. In particular, a joint employer must wield
actual control that has a “direct and immediate” impact on employees’ terms and conditions
of employment, as opposed to control that is only “limited and routine”71. This rule is too
recent to gauge how it will be applied in practice—and we may not get the chance if there is
a change in the occupant of the White House after the 2020 election, for it is a safe bet that
a new NLRB would change the rule yet again to something similar to the Browning-Ferris
standard.
   The NLRA’s recent experience with joint employment shows a significant amount of
change in a short period of time, with a possibility of still more change in the near future.
The Obama Board’s move to allowing for indirect and sporadic control in Browning-Ferris
promised to classify many more businesses as joint employers. The backlash from those
businesses and their supporters resulted in a reversal under the Trump Board, narrowing the
joint employment standard by requiring actual, direct, and regular control. No matter what
one thinks the standard should be, this brief history exhibits a significant amount of
instability—especially for workers and businesses that operate in the gray areas of this
doctrine—that makes an already confusing legal law doctrine even more so.




64 Ibid. at 1614.
65 Ibid. at 1613-14.
66 Ibid.
67 Ibid. at 1613 (stating that control over “terms and conditions of employment” include things such as “hiring,

firing, discipline, supervision, and direction,” as well as “dictating the number of workers to be supplied;
controlling scheduling, seniority, and overtime; and assigning work and determining the manner and method
of work performance”).
68 365 N.L.R.B., No. 156, 2017.
69 See Hy-Brand Industrial Contractors, Ltd., 366 N.L.R.B., 26, 2018 (vacating decision because one of the

participating Board Members had been a partner in a law firm that presented parties in the Browning-Ferris case
that Hy-Brand was reversing, while Browning-Ferris was still pending on appeal); Dubé L. E., Opfer C., Labor
Board Wants to Send Joint Employer Case Back to D.C. Cir., in BNA Daily Lab. Rep., Mar. 2, 2018.
70 On February 26, 2020 the N.L.R.B. finalized its rule which, effective April 27, 2020, incorporated the Hy-

Brand standard for joint employment under the NLRA. 29 C.F.R. § 103.40.
71 Hy-Brand, slip op. at 34. For a more detailed discussion of these changes and the joint-employer standard

under the NLRA, see Twenty-First Century Employers, in The Cambridge Handbook of U.S. Labor Law: Reviving American
Labor for a 21st Century Economy, 2019.

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b. Changing Joint Employment Standards Under Federal Wage and Hour Law.

   The FLSA is one of the most basic workplace laws in the U.S., mandating a minimum
wage and overtime premiums, while also banning child labor. Its approach to joint
employment has seen recent changes similar to the NLRA. Or at least attempted changes.
Because enforcement of the FLSA is not as agency driven as the NLRA, courts have a more
central role in setting joint employment standards. Thus, it is unclear where the law now
stands.
   Like in other contexts, there are a variety of scenarios under which two or more entities
might be considered joint employers under the FLSA. One situation occurs when an
employee engages in separate hours and work for two or more employers72. If the employers
are independent and the work for each is “disassociated” from the other, they will not be
joint employers73. However, if the employers’ and employees’ work are “sufficiently
associated,” based on a set of factors, then they employees will be considered joint
employers74.
   The other main situation—one that has produced the most litigation and confusion—
occurs when one entity is a formal or clear employer, but another entity simultaneously
benefits from the employees’ work75. An example of this situation is when employees work
directly for a subcontractor by doing work that also benefits a general contractor. How to
determine whether the other entity (like the hypothetical general contractor) should be
considered a joint employer has undergone significant changes recently.
   Traditionally under the FLSA, determining joint employment in a situation where an
employee provides work that benefits two or more entities centers on a multi-factored test.
This test—a variant of the “economic realities” test for FLSA employee classifications—is
similar to the common-law right-to-control test, but casts a wider net. This difference is the
result of statutory language in the FLSA that, because of the statute’s remedial purposes,
intends to cover a broader range of work relationships76. Courts have adopted different sets
of factors in FLSA litigation, but one of the leading cases is instructive, as its incorporates
most of the salient factors that may be helpful in determining whether a business that benefits
from an employee’s work is a joint employer. This test looks to whether the putative joint
employer:
   (1) had the power to hire and fire the employees;
   (2) supervised and controlled employee work schedules or conditions of employment;
   (3) determined the rate and method of payment;
   (4) maintained employment records;

72 29 C.F.R. § 791.2(e)(1) (2020)
73 Ibid. § 791.2(e)(2).
74 Ibid. (describing factors pointing to “sufficiently associated” joint employers if: “(i) There is an arrangement

between them to share the employee’s services; (ii) One employer is acting directly or indirectly in the interest
of the other employer in relation to the employee; or (iii) They share control of the employee, directly or
indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with
the other employer.”).
75 29 C.F.R. §791.2(a)(1) (2020).
76 Zheng v. Liberty Apparel Co., 355 F.3d 61, 67 (2d Cir. 2003). The FLSA defines an employer as one who

“suffer[s] or permit[s]” an individual to work. 29 U.S.C § 203(g); Nationwide Mut. Ins. Co. v. Darden, 503 U.S.
318, 326 (1992) (noting that the FLSA’s definition of the employment relationship is broader in scope that
traditional agency law); Rutherford Food Corp. v. McComb, 331 U.S. 722, 733 (1947).

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   (5) whether the premises and equipment of the putative joint employer were used for the
employee’s work;
   (6) whether the primary (or official) employer had a business that could or did shift as a
unit from one putative joint employer to another;
   (7) the extent to which employees performed a discrete line-job that was integral to the
putative joint employer’s process of production;
   (8) whether responsibility under the contracts between the primary employer and putative
joint employer could pass from one subcontractor to another without material changes;
   (9) the degree to which the putative joint employer or its agents supervised employees’
work; and
   (10) whether employees’ worked exclusively or predominantly for the putative joint
employer77.
   Most other federal courts use some of these factors, including the first four so-called
Bonnette factors, although other courts employ an entirely different set of factors to find joint
employment under the FLSA78.
   Adding to the confusion is the role of the federal Department of Labor, which has
authority to enact rules enforcing the FLSA. Courts often defer to these rules, but need not
- and, at times, do not - rubber stamp them. In 2020, the Department of Labor enacted a
new rule that would supplant its preceding joint employment factors79. The rule requires an
employee to work “directly or indirectly in the interest of” the joint employer80. To determine
whether this interest exists, the new rule supplants the factors noted above with the more
limited Bonnette factors, asking whether the putative joint employer:
   (1) hires or fires the employee;
   (2) supervises and controls the employee’s work schedule or conditions of employment
to a substantial degree;
   (3) determines the employee’s rate and method of payment; and
   (4) maintains the employee’s employment records81.
   According to the new rule, a joint employer must actually engage in such actions, either
directly or indirectly—the mere ability to undertake an action will not be sufficient82.




77 Zheng, 355 F.3d at 72.
78 See, e.g., Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 141-42 (4th Cir. 2017) (criticizing standards based on
common-law and putative joint employer’s relationship with employees and using instead six-factor test focused
on relationship between putative joint employers); Bonnette v. California Health & Welfare Agency, 704 F.2d 1465
(9th Cir. 1983) (using a four-factor, common-law based test adopted in new Department of Labor rule and
used as part of Zheng test).
79 An additional confusion is that the new rule did not change the joint employer test under the Family and

Medical Leave Act (FMLA), which uses the same remedial provisions as the FLSA and has traditionally used
the same definitional standards, such as joint employer. See, U.S. Dep’t of Labor, Joint Employer Status under the Fair
Labor Standards Act, 85 Fed. Reg. 2820, 2828, No. 55, Jan. 16, 2020; see, e.g., Moldenhauer v. Tazewell-Pekin Consol.
Commc’ns Ctr., 536 F.3d 640, 644 (7th Cir. 2008).
80 29 C.F.R. § 791.2(a)(1) (2020) (citing 29 U.S.C. § 203(d)).
81 Ibid. The Department of Labor also states that “Additional factors may be relevant for determining joint

employer status in this scenario, but only if they are indicia of whether the potential joint employer exercises
significant control over the terms and conditions of the employee’s work.” Ibid. § 791.2(b).
82 Ibid. § 791(a)(3)(1).



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     Although some courts have used these factors or some variation of them previously83,
limiting joint employment to these four factors has been criticized for being improperly
narrow. Of particular concern is the sole focuses on a business’ formal right to control
employees’ work, rather than the economic realities of a work relationship that typifies FLSA
coverage84. But that facet of the new rule standard seems to have been the point, as the
Department of Labor’s action intentionally narrowed the scope of joint employment,
including an express prohibition against considering employees’ economic dependency on a
putative joint employer, which is a key factor in the traditional economic realities test 85. But
it is unclear to what the extent courts will adopt this new rule, as some may find it inconsistent
with the FLSA’s definition of employer86 or Supreme Court precedent87. Indeed, several
states have sued to block the rule, arguing that it conflicts with the FLSA’s broad statutory
scope of employment88.


4. Conclusion.

    Identifying an employer in the U.S. is often no easy task. It requires navigating the
fragmented and shifting system of joint-employer standards that may apply in a given case,
then applying the appropriate standard to an increasingly fissured workplace. This trend is
exacerbated by emerging technology, which makes it easier for businesses to exert control
over the work of individuals who are officially employed by others.
    Barring any move to centralize work laws and their enforcement in the U.S., 89 many
employers and workers will continue to grapple with uncertainty whether they are in an
employment relationship and, thus, whether various work laws apply. Moreover, if joint
employment continues to be a politically charged issue, this lack of clarity will only get worse.
The result is that employers will need to be careful about exerting too much control over
workers with whom it does not want an employment relationship, but even such care may
not guarantee a certain outcome. For workers, the situation is more dire. Most have no
control over their work conditions and little, if any, knowledge of the joint-employment
doctrine. Thus, their ability to exercise statutory workplace rights will typically be at the mercy
of employers, agencies, and courts that are themselves navigating murky waters.



83 See Zheng, 355 F.3d at 66-68 (discussing factors as one of the two tests the Second Circuit had used in FLSA
joint-employment cases)
84 Ibid. at 69-70; see also Edmonds v. Amazon.com, Inc., 2020 WL 1875533, at *4 (W.D. Wash. Apr. 15, 2020)

(noting that the Ninth Circuit uses this four-factor test as a baseline, but also uses additional, economic realities,
factors under other circumstances, such as when one company contracts with another for work).
85 29 C.F.R. § 791.2(c) (2020).
86 See, e.g., Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017) (adopting employee-friendly joint-

employment standard); Penn B., New Joint Employment Rule Hinges on Reception in Court, in Bloomberg Law, Jan. 13,
2020.
87 See, Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947) (considering factors such as whether the

employees did specialty work, whether responsibility for the contracts passed from one employee to another,
the premises and equipment used for the work, and whether there was a business organization that could shift
the work from one putative joint employment to another).
88 New York v. Scalia, S.D.N.Y., No. 20-01689 (2020).
89 See, Hirsch J. M., (n.) 26 (advocating nationalizing labor and employment law in the U.S.).



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Copyright © 2020 Jeffrey M. Hirsch. This article is released under a Creative Commons
Attribution 4.0 International License




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