$22.4 Million FLSA Settlement For Contract Janitors

A recent $22.4 million tentative settlement entered into by three California grocery chains and 2,100 illegal alien contract janitors is another example of the success plaintiffs are having with the record number of Fair Labor Standards Act (FLSA) collective actions being filed against employers. The settlement suggests that courts are willing to look past an employee's independent contractor status and find that a company is a "joint employer" and liable for the FLSA violations of its contractor. It also signals that employers cannot avoid liability in an FLSA collective action just because the plaintiffs are illegal immigrants.

In Flores v. Albertsons, Inc., No. CV 01-00515 (C.D. Cal. 2002), a cleaning services company contracted with Albertsons, Ralph's and Vons to provide nighttime janitorial services. The 2,100 janitors who serviced the grocery stores, primarily undocumented workers from Mexico, were designated "independent contractors." The janitors disputed their independent contractor status and claimed that the grocery stores were "joint employers" who violated the FLSA by failing to pay them overtime even though they worked on average over 70 hours a week. The janitors also claimed that they were paid an average of $3.50 an hour, in cash with no taxes withheld, and were not given vacation days or health insurance.

Under the FLSA, a joint employer is individually responsible for complying with the FLSA. 29 C.F.R. 791.2(a). In determining whether an entity is a joint employer the courts consider whether it directly or indirectly hires and fires employees, controls or modifies schedules and working conditions, determines pay rates or methods of payment, and maintains employment records. Courts also look at whether the "premises and equipment" of the entity are used for the work, whether the employees' work is integral to the entity's business, and the permanence of the working relationship. In Flores, whether the grocery chains were joint employers was critical for the plaintiffs because the janitorial services company had declared bankruptcy, leaving the grocery chains as the only "deep pockets."

The grocery chains filed motions for summary judgment, arguing that they were not joint employers because the janitors were independent contractors employed and controlled by the janitorial services company. The motions were denied because the court found that merely designating employees independent contractors is not dispositive, and...