Question

Zheng v. Liberty Apparel Facts: 26 garment workers who performed the final assembly work of garments pursuant to sub-contracts for an apparel company sued the apparel company and the sub-contractors who had hired and paid them for violations of the FLSA. Because the sub-contractors had gone out of business, plaintiffs sought damages from the apparel company. Issue: Under the facts, is the apparel manufacturer a joint employer of the garment workers, along with the sub-contractors?Held: A genuine issue of material fact exists regarding whether the apparel company is a joint employer. Summary Judgment vacated and case remanded for additional fact finding, since all necessary factors were not considered.

1. What was the legal issue in this case? What did the court decide?

2. What criteria had the district court applied to determine whether the manufacturers were employers of the garment workers? What additional criteria does the appeals court say must be applied? How do these criteria help determine whether an employment relationship exists?

3. From the facts presented, how would you decide the case?

4. What are the practical implications of this case? What are the same such implications for workers who are victims of unscrupulous contractors? How about for firms that subcontract or otherwise outsource parts of their operations?

Answer 1

1. What was the legal issue in this case? What did the court decide?

In this situation, the legal question is that garment producers were joint employers of the private contractors that the manufacturer employed to stitch and finish clothing parts. The garment workers also brought suit as "joint employers" against Contractor Corporations and Liberty Apparel Company under the scope of the 1938 Fair Labor Standards Act ( FLSA). The United States District Court of New York Southern District ruled that the suppliers should not be held liable for violations of the legislative analogs of the FLSA or New York. The court found the District Court to have erred and remanded the appeal to the lower court. The court of appeal ruled that the FLSA requires that the District Court look beyond the statutory right of an individual to control the performance of the job before ruling that the organization is not an employer according to the FLSA, and that the judgment in favor of the defendants of Liberty be vacated.

2. What criteria had the district court applied to determine whether the manufacturers were employers of the garment workers?

The District Court applied the plaintiff’s admissions:

(i) The defendants did not hire complainants and fire them.

(ii) Supervising and controlling their job schedule and working conditions.

(iii) Determine cost and payment form.

(iv) Did not hold job records.

What additional criteria does the appeals court say must be applied?

The appeals court find the factors listed below pertinent to determine whether Liberty should be deemed a plaintiff’s joint employer:

(i) Whether the premises and equipment at Liberty were used for the work of the plaintiff.

(ii) If the Contractor Corporations had a company that might or did switch from a putative joint employer to a new one.

(iii) The degree to which the plaintiffs carried out a separate line-job was central to the manufacturing cycle of Liberty.

(iv) Whether the contractual responsibilities could pass from one subcontractor to another without any material changes.

(v) To what extent the Liberty Defendants or their subordinates oversaw the work of the plaintiffs.

(vi) Either the plaintiffs served for the Liberty Defendants individually or mainly.

How do these criteria help determine whether an employment relationship exists?

(i) premises and equipment. The worker must buy his own machinery, supplies, and tools for establishing himself as an independent contractor through the FLSA. Liberty supplied the garment worker's premises and equipment for sewing or fixing clothing that can be used to create joint putative employer premises.

(ii) Contractor companies which could / did switch from a putative joint employer to another as a company. The continuity of the relationship between Contractor Corporations and Liberty has changed as a unit between Contractor Companies and Liberty with shared premises power and plaintiff job functional control.

(iii) The variety of research which is central to Liberty's development cycle. Both subcontractors are able to do a job which is an integral part of the manufacturing cycle of joint employers. However, when considering an entity as a "joint employer," the extent to which subcontractors perform the work, the skill required for the work, and the level of loss on each party should be considered.

(iv) Contract liability passed on to subcontractors. The degree of reliability between Liberty and its subcontractors. Could the type of work done be passed on to other subcontractors with little to no changes to the agreement?

(v) The degree of research supervised solely by Liberty officers. The degree and regulation of the practical work exercised by the plaintiff exercised by the production process boss, Liberty.

3. From the facts presented, how would you decide the case?

Using the premises, facilities, and expertise level conducted by the plaintiff in everyday operations for the manufacturing cycle of Liberty is enough for me to believe that Liberty is the joint employer of the garment workers.

4. What are the practical implications of this case?

The practical implications of this case are whether substantial consideration should be given to FLSA on the use of premises, equipment and whether or not the services rendered are an integral part of the business development process whether employment relationships are established between companies and subcontractor.

What are the same such implications for workers who are victims of unscrupulous contractors?

The FLSA offers special safeguards for workers from employers who plan to use recruiting firms to outsource their company's work but then determine solely the type of work to be done as part of the manufacturing method.

How about for firms that subcontract or otherwise outsource parts of their operations?

Understand the FLSA, be conscious of the degree of competence needed to complete the work, which includes the services, equipment and materials necessary to complete the work. Outsourcing to self-employed contractors allows the FLSA to meet strict criteria when defining independent contractors.