There seems to be a trend among entities to combine services as part of the employment relationship. Companies often hire third-parties to perform a number of services that are traditionally performed by the employer. It’s common for an employer to outsource payroll, HR, and other employer functions. As a result, it oftentimes isn’t clear who is and who is not your employer. If your paycheck is short, can you bring a claim against the payroll company? If workplace harassment is not addressed properly, can you pin that on the HR-vendor? If your PFML application is denied by a private insurance company, can you seek a remedy from that company? In some situations, the two entities are so intertwined that they are deemed to be joint employers and thus are both liable for the alleged misconduct. In August of 2024, a federal court provided guidance on when a joint employer relationship exists.

Massachusetts federal court provides guidance on joint employer test

RXO Last Mile is a logistics company that contracts with large retail stores (e.g., Lowe’s) to coordinate deliveries of large goods. RXO also contracts with independent carriers that actually do the delivering. In this case, three of those drivers brought an unpaid-wage claim against RXO. In response to the claim, RXO argued that they could not be held liable to the drivers because they were not the drivers’ employer.

Ultimately, the Court disagreed. In doing so, the Court recounted the test used to determine joint employer status (found here), noting that an entity may be a joint employer when it “has retained for itself sufficient control over the terms and conditions of the second entity’s employees,” by, for example, having the power to (a) hire/fire, (b) supervise/control work schedules or conditions of employment, (c) determine rate and method of payment, and (d) maintain employment records. According to the Court, based on those factors, the following facts made RXO look like an employer:

• RXO required drivers to “pass a screening of their driving record, a drug test, and a background check” before performing delivery services;

• RXO conducted its own pre-hire interviews for drivers and required drivers to submit applications;

• RXO provided feedback to drivers and would punish drivers for poor performance (by reducing or eliminating their routes) and reward them for good performance (by issuing gift cards);

• RXO could remove a driver if ordered to by a customer (e.g., Lowe’s);

• RXO adopted standard operating practices—such as issuing specific routes to driving teams, controlling appearance (badges and shirts), imposing delivery requirements (order of deliveries, specific delivery windows, call-ahead requirement, haul-away requirement, customer-not-at- home procedures, standard installation procedures, return-to-store requirements, etc.), monitoring drivers during routes, and evaluating driver performance.

• RXO ultimately retain[ed] total control over whether and how much to pay out on customer damage claims as a matter of contract.

• RXO maintained records reflecting the results of drivers’ background checks, motor vehicle checks, and drug screens.

As you can see, the issue of who is and who is not your employer is not always clear. As such, when evaluating whether to bring a claim against your employer, it’s a good idea to evaluate whether there are other obvious entities that may be liable for the misconduct. This is where an experienced employment law firm like Steffans Legal can help.

If you think you have an employment claim contact us today.