Fourth Circuit clarifies circumstances of joint employment under FLSA

In Schultz v. Capital International Security, Inc, the Fourth Circuit Court of Appeals clarified the circumstances under which an employee is jointly employed by two employers pursuant to the Fair Labor Standards Act ("FLSA"). The court also further elucidated the difference between an independent contractor and an employee for purposes of determining a worker's entitlement to overtime. The district court had entered judgment in favor of the defendants, holding that the plaintiffs were not entitled to overtime because they were independent contractors as opposed to employees, but the Fourth Circuit vacated this judgment following a determination that the defendants were joint employers and that the plaintiffs were their employees for purposes of the FLSA.

In analyzing the issue of whether the plaintiffs were independent contractors or employees, the court noted that the issue is not the degree of control that an alleged employer has over the manner in which the work is performed in comparison to that of another employer. Rather, according to the Fourth Circuit, it is the degree of control that the alleged employer has in comparison to the control exerted by the worker. This analysis goes to the heart of the ultimate question--whether the worker, as a matter of economic reality, is dependent on the business the worker serves or, conversely, whether the worker is in business for himself. Once the court determined that the plaintiffs were employees, it easily determined that the defendants were joint employers on the basis that the plaintiffs performed work that simultaneously benefited both of the defendants.

(contributed by Sandi R. Wilson)