Author: Gilbert McWherter Scott Bobbitt PLC

The business model of today’s world is far different than the ones of even a few years ago. Now, your average businesses might have its own “core” set of employees, but also work with an outside tech team, a series of contractors and a handful of people who are technically employed by another agency, but somehow answer to the Big Wigs in this company as well.

In a nutshell, these types of arrangements fall under the umbrella term of “joint employment.” To make it easier for employers – and workers – to understand everyone’s rights and responsibilities, the Department of Labor’s Wage and Hour Division (WHD) has issued a new set of guidelines that “will be helpful concerning joint employment under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, et seq., and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), 29 U.S.C. 1801, et seq.3.”

How the guidance works

The first thing the new law does is more broadly describe the scope of joint employment. It also analyzes horizontal joint employment, where “there is typically an established or admitted employment relationship between the employee and each of the employers, and often the employee performs separate work or works separate hours for each employer. Thus, the focus of a horizontal joint employment analysis is the relationship between the two (or more) employers,” and vertical joint employment, where “an employee of one employer… is also, with regard to the work performed for the intermediary employer, economically dependent on another employer.”

The real life application of these types of employments play out all the time: the IT team that services all franchises of the same restaurant (horizontal) vs. the individual IT person who is hired by a staffing agency and put to work for Company A (vertical). While these examples are pretty easy to digest, not everyone’s employment status is so cut-and-dry. This is the reason why the DoL took on joint employment guidance in the first place – to ensure that workers, regardless of their type of joint employment, will be protected under the law.

What this means for workers

If it seems a bit complicated, that is because it is: being “employed” by two different companies or agencies leads to a lot of confusion. What the new laws do is make both employers (or however many there are) responsible for compliance with the FLSA and the MSPA. So if Company A is found to have violated the law in regards to overtime wages, Company B will also be held accountable for those violations. In essence, the changes force employers to more vigilant about their own behaviors and the behaviors of their partners.

This translates to good news for workers. Since FLSA and MSPA violations come with heavy fines and penalties, employees now have added assurances that A) their employers will be more alert to potential problems, and B) regardless of which employer violates the law, the workers will have recourse to move forward with a claim, as opposed to be shuffled back and forth because no one is quite sure who should be held accountable.

At the Gilbert Firm, we handle complex wage and hour claims so that Tennessee workers can protect themselves. To make an appointment with Michael Russell or Clint Scott, please contact us. The Firm maintains multiple offices in Nashville, Chattanooga, Memphis, or Jackson.

The Fair Labor Standards Act (FLSA) is complicated, but to the benefit of most employees, it does one very important thing in particular: it ensures that you are paid overtime wages when you work more than 40 hours a week. True, there are exemptions under the law – commission-based jobs are ineligible, for example – but it applies to jobs in the private sector as well as those in the local, State and Federal governments’ domain.

One of the groups exempted from collecting overtime wages includes “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers.” If you have walked into a dealership in the last decade, however, you might notice that it employees a team of “service advisors:” men and women whose role is to find out what is wrong with your car and then sell you a solution to fix that problem. They do not sell automobiles, nor do they actually service the vehicles: they fall somewhere in the middle.

This nebulous role of the service advisor is at the heart of a lawsuit from 2012, which included “five service advisors who sued Mercedes-Benz of Encino, California in 2012 for alleged violations of the Fair Labor Standards Act” according to Driving Sales. The plaintiffs were paid commission only, and were not eligible for overtime under the law. They claimed that their particular job requirements did not fall under the exemption, and that they should be entitled to overtime wages. The original lawsuit was dismissed, but on appeal the Ninth Circuit reversed the decision. Now, the Supreme Court of the United States has agreed to hear the case.

What can SCOTUS do?

Whether or not the Supreme Court sides with the plaintiff or the defendant rests on how the Justices read the law. A broad interpretation could claim that service advisors are engaged in both the selling and the servicing of vehicles, thus making them ineligible for overtime. However, a closer reading of the law may show that since the plaintiffs neither sell the vehicles themselves, nor physically service those vehicles when their owners take them for repairs – facts that were never in dispute during the case – then service advisors should be entitled to overtime wages because they are not exempt under that same law.

If SCOTUS sides with the plaintiffs, then services advisors around the country could see their paychecks change in a very real way: either they may collect the overtime they are due, or the dealerships may resort to the same legal tactics so many other companies use, and cut the hours of the advisors to ensure that they are never eligible for the additional wages.

Wage and hour violations like this one – indeed, any cases involving the FLSA – are complicated, and best handled by a skilled Tennessee labor and employment attorney. The Gilbert Firm provides comprehensive representation on behalf of employees throughout the state. Please contact Michael Russell or Clint Scott of the Gilbert Firm to reserve a consultation time at one of our offices in Nashville, Chattanooga, Memphis or Jackson.