7th Circuit: Joint Employer Doctrine in context of the FMLA

Employers that employ 50 or more employees in a 75-mile radius ( as the car drives not as the crow flies) must comply with the Family Medical Leave Act (FMLA). In enacting the FMLA, Congress understood that small employers are always able to shoulder the financial burdens imposed by FMLA compliance. Congress charged the Department of Labor (DOL) to create regulations that assure the purposes behind the FMLA are carried out. One of many regulations promulgated by the DOL is the joint employer doctrine. The joint employer doctrine allows an employee to add the employees of two or more employers to achieve the 50-person threshold required for FMLA compliance. According to the DOL, a joint employment relationship may exist where (a) Where two or more businesses exercise some control over the work or working conditions of the employee, then businesses may be joint employers under FMLA. Joint employers may be separate and distinct entities with separate owners, managers and facilities. Where the employee performs work that simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist in situations such as:

(1) Where there is an arrangement between employers to share an employee’s services or to interchange employees; (2) Where one employer acts directly or indirectly in the interest of the other employer in relation to the employee; or, (3) Where the employers are not completely disassociated with respect to the employee’s employment and may be deemed to share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.

Denise Moldenhauer’s Claim:

Denise Moldenhauer worked for the Tazewell–Pekin Consolidated Communications Center as a dispatcher. She missed a considerable amount of time from work due to chronic pancreatitis. Eventually, she was terminated. After she was terminated, she sued alleging her termination was in retaliation for her exercising rights guaranteed her under the FMLA. Since the Communications Center, a non-profit agency did not employ 50 employees, she also sued the cities of Tazewell and Pekin alleging they were joint employers. In support of her argument that she was joint employer of both cities and the communication center she pointed to the following:

1. The Center rented space from the City of Pekin and, to enter the building, had to wear City of Pekin employee badges;

2. The Center employees were considered employees of the City of Pekin for workers compensation, health insurance and participation in a municipal employees retirement plan;

3. Center employees are listed as employees on W-2 forms,

4. Center employees were required to comply with a sexual harassment policy that named an employee of the City of Pekin as the point of contact.

The cities defended by arguing that the Center was an independent agency and they exercised no control over the terms and conditions of the employment.

The court, after analyzing decisions from other appellate courts, held that the cities and the Center were not joint employers for purposes of the FMLA, because they did not exercise control over the working conditions of Ms. Moldenhauer. There was no evidence the cities were involved in activities typically associated with the degree of control an employer exercises over an employee such as sets wages, determining hours worked or the number of individuals working on a shift. As a result, the court ruled in favor of the Center and the two cities.

The Bottom Line:

Any time an employer decides to share employees with another employer, there a pitfalls to consider. One of those is where the sharing arrangement can create liability under workplace and other laws. Any decision to enter into a joint employer relationship should only be made after consulting with legal counsel.