California Labor Commission Action Highlights Extensive Applicability of New Joint Employer Law

June 15, 2018

A California restaurant company was found partially liable under the state’s expansive joint employer law and fined $4.2 million for the underpayment of wages by a property services subcontractor of one of the company’s contractors.

While the law only applies to property services and the long-term care industry, most large employers contract out janitorial, landscaping, and other property services, which in turn may be further subcontracted out.  So far, the law has been used nine times since its enactment in 2014.

“Client businesses can no longer shield themselves from liability for wage theft through multiple layers of contracts,” said California Labor Commissioner Julie Su.

NYC to follow suit?  The New York City Council is considering a similar measure that would make franchisors joint employers under the NYC Human Rights Law.  The bill states that any person would be considered an employee if an employer “maintains full or partial control over (i) the terms, conditions or privileges of the person’s work, (ii) the conduct of the person’s work, or (iii) the right of the person to continue to work, regardless of whether there is any integration of operations between multiple employers and regardless of which, if any, employer compensates the person... and a franchisor is deemed one of the employers of all persons employed by a franchisee of such franchisor.”