Third Circuit Establishes New Test for Joint Employer Liability Under FLSA

In In Re: Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, 2012 U.S. App. LEXIS 13229 (3d. Cir. June 28, 2012), the Third Circuit Court of Appeals announced a new test for determining whether a joint employer relationship exists under the Fair Labor Standards Act. Now deemed the “Enterprise test,” courts first must consider: (1) the alleged employer’s authority to hire and fire the relevant employees; (2) the alleged employer’s authority to promulgate work rules and assignments and to set the workers’ conditions of employment, including compensation, benefits, and work schedules, including the rate and method of payment; (3) the alleged employer’s involvement in day-to-day employee supervision, including employee discipline; and (4) the alleged employer’s actual control of employee records such as payroll, insurance, or taxes. The court next emphasized that this is not an exhaustive list of the relevant considerations, and thus it cannot be “blindly applied.” Rather, courts next must consider any other indicia of “significant control” over the employee (by the potential joint employer), which it held may be persuasive to a finding of joint employment when incorporated with the other factors. In adopting this flexible four factor test, the court combined the test established in Lewis v. Vollmer of America, No. 05-1632, 2008 WL 355607 (W.D. Pa. Feb. 7, 2008) and Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1981), emphasizing that the court must “consider all the relevant evidence, including evidence that does not fall neatly within one of the above factors.”