(LABOR) Walmart Potentially Liable For Wage Violations as a Joint Employer. We see yet another case where Employees of a Subcontractor May Sue the Prime Contractor as if they are their employer. This decision potentially impacts all employers and contractors that engage in the “Labor Broker” model of business.

GMCS, the recognized expert in Industry & Labor Relations, www.gregorymcs.com:

Many Philadelphia commercial construction employers engage in the use of a “Labor Broker” to utilize members of other building trades on projects; this is usually done to avoid signing additional collective bargaining agreements and assuming the short and long term liabilities associated with these collective bargaining relationships.  This second decision could potentially have broad-reaching implications for those employers that utilize this method of employment with subcontracted employees, independent contractors and all employers that engage in the “Labor Broker” model of business.

We first reported on a similar case on December 18, 2013.  That posting may be found here…

Walmart Potentially Liable For Wage Violations As Joint Employer Of Subcontractors’ Employees – Labor Brokers and Contractors

Finding that ample evidence existed that Walmart exercised control over the working conditions of the workers employed by Walmart’s warehouse subcontractors, a California federal district court in Carrillo v. Schneider Logistics Trans-Loading and Distribution, Inc., held that Walmart may be jointly liable for wage violations committed by the subcontractors.

In Carrillo, Walmart contracted with SLTD to operate the warehouses that received, processed and distributed merchandise on behalf of Walmart (and other retailers), and SLTD in turn subcontracted merchandise loading and unloading services to other entities. The plaintiffs were employed by the subcontractors that performed the merchandise loading and unloading services, and brought claims for unpaid wages, failure to maintain proper records and related claims against their employers, SLTD and Walmart. Walmart sought to dismiss the claims against it on the grounds that it could not be liable as the “employer” of the plaintiffs.

In denying Walmart’s request, the court determined that Walmart exercised sufficient control over the working conditions of the plaintiffs to potentially render Walmart a joint employer, and thus be jointly liable for the subcontractors’ alleged wage violations. Among other things, the court found that Walmart imposed screening requirements on all employees hired to work at the warehouses, approved overall staffing levels, had oversight of hours worked, monitored and enforced productivity standards, influenced pay rates and working schedules, and owned the warehouses and equipment used at the warehouses.

GMCS Editorial:  Construction employers should be very cautious of their labor broker relationships if they employ a labor contractor on their projects and conform to any or all of the following:

• Exercise sufficient control over the working conditions of the subcontracted employees
• Impose screening requirements on employees hired
• Approve overall staffing levels for the sub contracted employees
• Have oversight of hours worked
• Monitor and or enforce productivity standards
• Influence pay rates and or working schedules
• Own equipment used at facilities and or sites.

Employers that engage in this model could be potentially rendered as a joint employer, and thus be jointly liable for the subcontractors’ alleged wage violations, among other things.   Employers should consider actions limiting their liability and exposure to these relationships.

Source: JDSupra