1. WHOSE EMPLOYEE IS IT? Subcontracting & Joint Employer Considerations
Heather Renée Adams & Patrick Devine
Ice Miller LLP
250 West St., Ste. 700
Columbus, Ohio 43215

2. AGENDA Independent Contractors, Employees, Joint Employers – “Oh, My!”
The Basics
Why you should care
Shifting Legal Landscape
2. Consequences of the Joint Liability Doctrine
3. Practical Considerations
4. Understanding DBE Relationships
5. Joint Employment Implications

3. THE BASICS
Independent Contractors: Independent of substantial control and direction.
Employees: Companies have the right to direct and control the manner in which employees perform their jobs.
Joint Employer Doctrine: The joint employment exists when the facts establish that employment by one employer is not completely disassociated from employment by the other employer. See Fair Labor Standards Act. Whether multiple employers should be treated as one.
The joint employer doctrine is used by the NLRB and courts in determining legal responsibility for issues such as:
overtime pay when more than one employer is involved
Liability for discrimination
Violations of the NLRA/Union organizing
Joint employers are responsible by jointly and individually for compliance with all workplace regulations.

4. THE BASICS KEY LEGAL PRINCIPLE
A party is liable for its conduct toward its employees
but is NOT liable for its conduct toward independent contractors

5. INDEPENDENT CONTRACTOR STATUS —WHY YOU CARE…
Tax Liability
Legal Liability
Common law
State law
Federal law
Trap: Joint Employment

6. SHIFTING LEGAL LANDSCAPE: Browning-Ferris Industries (August 27, 2015)
Decision broadened liability for companies that subcontract, outsource or use temp workers.
A prime contractor can be found to be the “joint employer” of its subcontractor’s employees if it is found to exercise direct or indirect control over the subcontractor’s employees.

7. SHIFTING LEGAL LANDSCAPE:
Labor Department Rescinds Expanded 'Joint Employer' Rule
NEWS RELEASE
Date: June 7, 2017
Release Number: NAT
US Secretary of Labor withdraws joint employment, independent contractor informal guidance
WASHINGTON – U.S. Secretary of Labor Alexander Acosta today announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors.  Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. The department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.

8. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Does the Law Apply?
Nehls v. Quad-K. Advertising, Inc., 106 Ohio App. 3d 489 (6th Cir )
Secretary of company sued company for sexual harassment and discrimination.
Company argues law does not apply because it does not “employ” workers, rather it uses independent contractors.
Court disagrees. The independent contractors are actually employees.

9. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Identifying the Responsible Employer
Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017)
Mario Salinas employed by subcontractor J.I. General Contractors (framing and drywall)
Mario worked almost exclusively for Commercial Interiors, Inc. This company offered general contracting and interior finishing services, including drywall installation, carpentry framing and hardware installation.
Mario alleged that he was not paid overtime in violation of the FLSA
Mario sought to hold both JI and Commercial liable of the aggregate number of hours he worked for both employers.

10. Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017)
CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Identifying the Responsible Employer
JI General Contractors (SUBCONTRACTOR)
Commercial Interiors, Inc. (PRIME)
Factors in favor of joint employer status
Did not maintain any timesheets for JI employees
Factors in favor of joint employer status
Mario almost exclusively assigned to work for Commercial
Foreman threatened to fire JI employees
Required several JI employees complete employment applications in order to work on a Commercial job site.
Issued a few paychecks directly to JI employees
Determined JI employees’ weekly schedules
Permitted JI employees to pick-up additional hours
Determined where JI employees would be assigned to work
JI employees wore hard hats and PPE with Commercial's logo
Commercial required JI employees to sign timesheets
Required JI employees to attend meetings and safety trainings
Factors against joint employer status
Directly employed Mario
Selected employees to be assigned to Commercial jobsites.
Paid paychecks to JI employees
Communicated staffing needs directly to JI
Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017)

11. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Does the Law Apply?
Sublett v. Edgewood Universal Cabling Systems, Inc., 194 F. Supp. 2d 692 (2002)
Troy Sublett was hired by Aerotek, Inc. a temporary employment agency.
Aerotek assigned Troy to work as a cable installer for a company called Edgewood.
During his time at Edgewood supervisor reprimanded Troy for his hair style (Dreadlocks) and said that he would “never go anywhere in the company” due to his looks.
Troy filed discrimination lawsuit against Edgewood.
Edgewood argued – Not the Employer!
Court disagreed.

12. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Court Analysis
Sublett v. Edgewood Universal Cabling Systems, Inc., 194 F. Supp. 2d 692 (2002)
AEROTEK
EDGEWOOD UNIVERSAL
Factors in favor of employee status
Significantly affected Troy’s job opportunities
Control over Troy’s day-to-day activities was unknown
Factors in favor of joint employer status
Could terminate service agreement with Aerotek if it was unsatisfied with Troy’s performance
Could hire Troy as a full-time employee if it so desired
Directed where Troy was to work
Managed Troy’s schedule
Factors against joint employer status
Paid Troy’s salary and benefits
Paid all taxes, social security, medicare and other withholding deductions
Paid workers compensation coverage
Paid unemployment taxes

13. CONTROL MATTERS: Independent Contractor vs. Employee
Extent of control over details of the work
Whether the one employed engaged in a distinct occupation or business
Whether the kind of occupation is done under the direction of an employer or by a specialist without supervision
The skill required
Who supplies the tools and location for the work?
Length of time of employment
Method of payment
Whether the work is part of the regular business of the employer
What do the parties believe the relationship to be?
Whether the principal is in the business.

14. CONTROL MATTERS: Employee v. Joint Employee
Ability to Discharge
Mode of Payment
Supplying Tools or Equipment
Belief of the Parties
Control over the means used and the results achieved
Length of employment
Establishment of Work Boundaries

15. Practical Considerations: Independent Contractor v. Employee
No. 1: Extent of control over details of the work
to whom does the person answer?
composition of crews?
crew shifts?
assignment?
Whether the one employed engaged in a distinct occupation or business
--distinctive license
--clearly person’s business
--no exclusive relationship

16. Practical Considerations: Independent Contractor v. Employee
No. 3: Whether the kind of occupation is done under the direction of an employer or by a specialist without supervision
No. 4: The skill required
“Skilled labor is often performed by an independent contractor”
licensed?

17. Practical Considerations: Independent Contractor v. Employee
No. 5: Who supplies the tools and location for the work?
Often a combination of players
If so, neutral factor
No. 6: Length of time of employment
Seasonal?
Not a long term relationship?

18. Practical Considerations: Independent Contractor v. Employee
No. 7 Method of payment
Not hourly?
Set rate/piece rate?
Payment by hour or month indicates employer-employee relationship
Who pays whom?
No. 8: Whether the work is part of the regular business of the employer
How essential to business?
Specific examination
Could alleged employer do it?
License?

19. Practical Considerations: Independent Contractor v. Employee
No. 9: What do the parties believe the relationship to be?
Contract?
Understanding?
Stray remarks?
No. 10: Whether the principal is in the business
Often the case
Not determinative

20. Practical Considerations
What the parties call a relationship is NOT controlling!
How individual views their relationship with a company is NOT controlling?
Does your subcontract contain an indemnity/defense provision? What are the terms?
Has the subcontractor listed the prime as an additional insured on its certificate of insurance?

21. UNDERSTANDING DBE RELATIONSHIPS

22. CONCLUSION All battles are won or lost before they are ever fought”
--The Art of War

23. Questions?

24. WHOSE EMPLOYEE IS IT? Subcontracting & Joint Employer Considerations
Heather Renée Adams & Patrick Devine
Ice Miller LLP
250 West St., Ste. 700
Columbus, Ohio 43215