Third Circuit Explains Joint Employer Status Under FLSA as "Significant Control" over Essential Terms and Conditions of Employment
By Martha Keon
The Third Circuit recently clarified the test for joint employer status under the Fair Labor Standards Act in the context of a holding company providing shared services to its subsidiaries in In re: Enterprise Rent-a-Car Wage & Hour Employment Practices Litigation, 2012 U.S. App. LEXIS 13229 (3d Cir. June 28, 2012).
At all times relevant, Enterprise Holdings, Inc. was the parent company and sole stockholder of 38 domestic subsidiaries operating rental car agencies in different states. The same three individuals who were the holding company’s directors – the Chairman and CEO, the President and COO, and the Executive Vice President and CFO – were also the only Board members of each of the subsidiaries. The holding company provided shared services to its subsidiaries, which were optional in the discretion of the subsidiary and paid for via dividends and management fees. The shared services included: employee benefit plans, rental reservation tools, a central customer contact service, insurance, technology, legal services, business guidelines, and human resources services. The human resources services provided by the holding company included providing job descriptions, best practices, training materials, performance review forms, and compensation guidelines. There was evidence that during 2005, representatives of the holding company recommended that the subsidiaries not pay overtime wages to assistant managers who were employed by subsidiaries outside of California.Continue Reading...