If your company relies on workers provided by a different entity, it is a good idea to have an attorney vet the arrangement. That’s because if that company is violating federal or state wage and overtime laws, you could find yourself on the hook for those violations as a “joint employer.” The key element in determining if you’re an employer is whether you exercise “direct or indirect control” over the worker’s work.
A recent Massachusetts case involved this very issue. In that case, energy and wireless companies hired a firm called Credico LLC to market their services. Credico, in turn, hired a small sales-consulting outfit called DFW to make door-to-door sales on behalf of Credico clients.
The DFW salespeople later brought a class action suit accusing DFW of illegally misclassifying them as “independent contractors” to avoid paying them minimum wage and overtime. Presumably because DFW was a small company with few assets, the salespeople also went after Credico as a joint employer.
A Massachusetts trial court judge ruled that the workers were indeed misclassified but let Credico out of the suit. According to the judge, there was insufficient evidence of Credico exercising control. Specifically, the workers didn’t show that Credico had the power to hire or fire DFW workers, control their schedules or set their pay.
This case could easily have gone the other way in a different state. Talk to a local attorney to discuss the situation where you live.