Joint-Employer Test Established by Pennsylvania Appellate Court

Posted by Bagby & Associates LLC on 3 July 2012

In a case of first impression, the Third Circuit recently created a four-part test to determine whether a company is an employer under the Fair Labor Standards Act. The issue arose in class action litigation against Enterprise Holdings, which was sued by assistant managers at Enterprise Rent-A-Car branches across the country for allegedly failing to pay overtime wages in violation of the FLSA. Rejecting the assistant managers claims, the Third Circuit established a four-prong test that focuses on how much control the alleged employer would have over the work and structure of the employment and enumerated four factors to assess this relationship: (1) Does it have authority to hire and fire?; (2) Does it have authority to promulgate work rules and assignments, and set condition of employment, including compensation, benefits and hours?; (3) Does it conduct day-to-day supervisions, including employee discipline?; and, (4) Does it control employee records, including payroll, insurance, taxed and the like? These factors are similar to those used in other circuits across the country and reflect a practical approach taken by the court. Thus, Enterprise Holdings was not found to be a joint employer with the individually owned branches of Enterprise Rent-A-Car.


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