Tag Archives: Joint Employment

W.D.Mo.: Court Has Subject Matter Jurisdiction Over Claims That Could Be Brought By Members of Putative Class, But Could Not Be Brought By Named Plaintiffs

Nobles v. State Farm Mut. Auto Ins. Co.

This case concered off-the-clock claims that were brought as a so-called hybrid case, so named because the claims asserted were a hybrid of several state wage and hour laws, as well as under the FLSA.  As discussed here, the plaintiffs, employees of one State Farm entity (State Farm Fire) sued both their employer, and another State Farm entity (State Farm Mutual), alleging identical wage and hour violations were committed by both against similarly situated employees.  By Motion to Dismiss, State Farm Mutual challenged the named-plaintiffs’ standing to assert claims against it, asserting that the named plaintiffs lacked standing to do so, because it was not their employer.  The court rejected these arguments, in granting plaintiffs’ motions for conditional and class certification.

Addressing this issue the court explained:

“In its pending Motion to Dismiss, State Farm Mutual contends that because Plaintiffs lack standing to assert joint employer status, the Court lacks subject matter jurisdiction, and therefore that claim should be dismissed under Federal Rule of Civil Procedure 12(b)(1). Alternatively, State Farm Mutual contends that Plaintiffs have failed to state a claim for joint employer status and therefore it should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).

State Farm Mutual argues that “[o]nly State Farm Fire employees could possibly have standing to assert joint employment claims under Plaintiffs’ … theory, and there are no such plaintiffs in this case.” [Doc. # 111, at 13]. Neither Nobles nor Atchison are employees of State Farm Fire. However, standing issues “must be assessed with reference to the class as a whole, not simply with reference to the individual named plaintiffs.” Payton v. County of Kane, 308 F.3d 673, 680 (7th Cir.2002). Here, unnamed class members of the certified classes and collective include State Farm Fire employees who would have standing to bring claims under State Farm Mutual’s status as a joint employer with State Farm Fire. Thus, the Plaintiffs in this litigation have standing to assert joint employment status for members of the class.

Two recently decided cases in this district, Gilmor v. Preferred Credit Corp., No. 10–0189–CV–W–ODS, 2011 WL 111238 (W.D. Mo. Jan 13, 2011), and Wong v. Bann–Cor Mortgage, No. 10–1038–CV–W–FJG, 2011 WL 2314198 (W.D. Mo. June 9, 2011), also concluded that the court had subject matter jurisdiction over claims that could be brought by members of the certified class, but could not have been brought by any of the named plaintiffs. However, as a practical matter, it may be prudent to have a specific named Plaintiff whose named employer is State Farm Fire. See Gilmor, 2011 WL 111238, at *7. Therefore, Plaintiffs shall file an appropriate motion to designate such an employee prior to the close of discovery on the merits.”

Addressing (and rejecting) the defendants’ contention that plaintiffs had failed to sufficiently plead joint employment, the court reasoned:

“To determine whether an individual or entity is an employer, courts analyze the economic reality of the relationship between the parties.” Loyd v. Ace Logistics, LLC, No. 08–CV–00188–W–HFS, 2008 WL 5211022, at *3 (citation omitted). Although the Eighth Circuit has not yet stated a test to determine joint employer status, four factors are typically examined by courts to make this determination. They are: “whether the alleged employer: (1) had the power to hire and fire the plaintiff; (2) supervised and controlled plaintiff’s work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained plaintiff’s employment records.” Id. at * 3 (citing Schubert v. BethesdaHealth Grp., Inc., 319 F.Supp.2d 963, 971 (E.D.Mo.2004)).

State Farm Mutual asserts that Plaintiffs have failed to allege the elements of joint employer status or single enterprise status. This argument rests on the contention that because all of the named plaintiffs in the litigation are not employees of State Farm Fire, none of their allegations concern State Farm Mutual’s power to hire or fire any plaintiff who is an employee of State Farm Fire. [Doc. # 111, at 7].

The Court finds that this argument is a re-characterization of State Farm Mutual’s standing argument. As previously stated, Plaintiffs in this case include the certified classes. See Gilmor, 2011 WL 111238, at *6 (citing Sosna v. Iowa, 419 U.S. 393, 399 (1975)). Plaintiffs in this case include State Farm Fire employees who were subject to State Farm Mutual’s policies; and the Second Amended Complaint alleges that State Farm Mutual had the power to hire or fire them.

Second, State Farm Mutual asserts that even if the Court finds that Plaintiffs have alleged the elements of joint employment status, Plaintiffs’ factual allegations are “broad, unsupported statements” that do not provide the required factual support for Plaintiffs’ joint employment claim. [Doc. # 111, at 9]. The Court disagrees with State Farm Mutual’s characterization of Plaintiffs’ allegations. The Plaintiffs allege in their Second Amended Complaint that (1) the human resources department in State Farm Mutual retains the power to promote, retain, and discipline State Farm Fire employees, (2) State Farm Fire employees’ work and compensation are subject to State Farm Mutual’s written pay and timekeeping policy, and (3) State Farm Mutual’s and State Farm Fire’s timekeeping records are housed together, which the Court liberally construes to imply that State Farm Mutual maintains State Farm Fire’s timekeeping records. 

For these reasons, the Court finds that Plaintiffs have sufficiently stated a joint employer claim.”

Click Nobles v. State Farm Mutual Automobile Insurance Company to read the entire Order.

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M.D.Tenn.: Contract Cleaners Not Joint Employees of the Restaurants Cleaned, Despite Fact They Exclusively Cleaned Defendant’s Restaurants

Politron v. Worldwide Domestic Services, LLC

Plaintiffs filed this action for unpaid wages and overtime pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. Plaintiffs’  alleged that they were hired by Defendant Worldwide Domestic Services, Inc. (“Worldwide”) during the time period of October 2010 to December 2010 to clean Chili’s restaurants in the Middle Tennessee area.  The case arose from Plaintiffs’ contention that paychecks issued to the Plaintiffs by Worldwide bounced due to insufficient funds.  Plaintiffs alleged that Defendants’ failure to pay Plaintiffs at least minimum wage for each hour worked is a violation of the FLSA and, as discussed here, that Defendants Worldwide, Elite Commercial Cleaning, LLC and Chili’s, Inc. were “joint employers” under the FLSA.

Acknowledging that the Sixth Circuit had yet to formulate a specific test for the application of joint employment under the FLSA, the court instead discussed law from other courts, who have developed such tests.  Applying the various factors other courts have used, the court determined that the restaurant owner Defendant, was not properly alleged to be a joint employer here.

The court reasoned:

“Here, the Court finds that the agreement between Brinker and Worldwide, as alleged in Plaintiffs’ Amended Complaint, was an outsourcing type of relationship. Worldwide contracted with Brinker to have its restaurants cleaned after hours. Plaintiffs admit that they worked at the direction of Worldwide. Plaintiffs’ work was dependent upon Worldwide’s ability to get and keep contracts for cleaning. Plaintiffs agree that no one from Brinker supervised, trained or directed them; no Brinker employees were even present when Plaintiffs worked. Brinker had no control over their wages, no authority to hire, fire or discipline them, and kept no employment records for Plaintiffs. Plaintiffs received their relevant income tax information from Worldwide or from Defendant Elite Commercial Cleaning. There is no allegation that Brinker knew which employees worked or how many hours they worked.

Although Plaintiffs contend that every hour they worked was at Chili’s and they used some equipment from the restaurants (they also used equipment from Worldwide), the Court finds that the factors indicating a joint employer are outweighed by those which indicate no such relationship between Plaintiffs and Brinker.”

Although the case is not groundbreaking, it does demonstrate the flaws in allowing such “outsourcing” to abrogate a company’s responsibilities to those who provide its essential services under the FLSA.

Click Politron v. Worldwide Domestic Services, Inc. to read the entire Memorandum Decision.

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5th Cir.: As Plaintiffs’ Joint Employer, Staff Leasing Company Qualified As “Motor Carrier” Subject To MCA Exemption From FLSA’s Overtime Pay Requirements, Because “Actual” Employer Was A “Motor Carrier”

Songer v. Dillon Resources, Inc.

This case was before the Fifth Circuit on Plaintiffs’ appeal of an Order granting Defendant, a staff leasing company, summary judgment finding that they were entitled to assert the MCA exemption, because the company they leased Plaintiffs to was a motor carrier entitled to assert the exemption.  The Fifth Circuit affirmed the decision, essentially holding that the staff leasing company Defendant was entitled to assert the exemption of the actual employer. 

Plaintiffs did not dispute that Sunset Ennis and Sunset Logistics (the “actual” employers), two trucking companies, were motor carriers subject to the Secretary’s power. Instead, they argued that Dillon, a staff leasing agency, was not a motor carrier within the meaning of the MCA. Defendants assert that because the Sunset companies are motor carriers and the Sunset companies are joint employers with Dillon, Dillon is also a motor carrier within the meaning of the MCA.

Reasoning that the the staff leasing company was entitled to assert the Motor Carrier Exemption, if the “actual” employer was entitled to assert same, the Fifth Circuit stated:

“While Fifth Circuit precedent is limited on this issue, other courts have held that a staff leasing company who provides employees for a motor carrier and operates as a joint employer with the carrier meets the requirements of 29 C.F.R. § 782.2(a)(1). See, e.g., Moore v. Universal Coordinators, Inc., 423 F.2d 96, 99-100 (3d Cir.1970) (holding that truck drivers were employees of both noncarrier truck driver leasing company and private motor carrier and therefore MCA exemption extended to leasing company). The Moore court analyzed the MCA and the FLSA, and determined that Congress intended to regulate employees of carriers in the interest of safety. Id. at 99. Therefore, the Secretary’s power had to extend to leased drivers and to the leasing company that employed them. Id. at 99-100.

In a more recent case, the district court cited Congressional safety concerns as the rationale for extending the exemption:

The [MCA] exemption, as explained in Moore, safeguards the Secretary[‘s] authority to regulate the qualifications and maximum hours of employees whose work affects the “safety of operation” of a motor carrier…. Refusing to extend the [MCA] exemption to the staffing agency defendants would therefore facilitate what Congress sought to prohibit-circumvention of the Secretary’s regulatory authority.  Tidd v. Adecco USA, Inc., No. 07-11214-GAO, 2010 WL 996769, at *2 (D.Mass. Mar.16, 2010) (citing Moore, 423 F.2d at 98-99).

Applying Moore and Tidd, the evidence supports a finding that Dillon, as joint employer with Sunset Logistics and Sunset Ennis, is a carrier subject to the Secretary’s jurisdiction. Dillon is a staff leasing company who provides drivers to Sunset Logistics and Sunset Ennis to fulfill interstate work orders from clients for compensation. Our review of the record reflects the following evidence: Dillon hires and trains the drivers and is responsible for their payroll, the Sunset companies are responsible for control of the drivers’ day-to-day operations, and Dillon is reimbursed for wages and benefits paid to the drivers and receives a fee when the drivers are assigned. These facts are similar to Tidd, in which the staffing agency defendants were held as joint employers to FedEx, a motor carrier, and, therefore, subject to the Secretary’s jurisdiction. See Tidd, 2010 WL 996769, at *2-3. Accordingly, we hold that the first requirement for jurisdiction under the MCA-i.e., that Plaintiffs work for carriers engaged in interstate commerce-is met. See Barefoot, 1994 WL 57686, at *2.”

To read the entire opinion, click here.

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2d. Cir.: Question Of Joint Employer Is Mixed Question Of Law And Fact, Properly Submitted To The Jury

Ling Nan Zheng v. Liberty Apparel Co. Inc.

Plaintiffs-appellees were 25 Chinese garment workers living and working in New York City’s Chinatown. In 1999, they sued Liberty Apparel Company and its principals Albert Nigri and Hagai Laniado (collectively, “the Liberty Defendants”), and others, for violations of the Fair Labor Standards Act (“FLSA”), and the New York Labor Law (“NYLL”). After a lengthy procedural history, the case went to a jury trial, and the principal issue was whether the Liberty Defendants were plaintiffs’ “joint employer” for purposes of the FLSA and New York state law claims.

The Liberty Defendants appealed that judgment.  In this opinion, the Second Circuit considered Defendants’ contention that the district court-rather than the jury-should have determined whether the Liberty Defendants were plaintiffs’ joint employer.  And on that issue, they affirmed.  The substantive law regarding the joint employment issue was discussed in a separate opinion.

After a lengthy procedural history, the defendants removed for summary judgment, and on May 23, 2008, Judge Sullivan denied that motion. Zheng v. Liberty Apparel Co., 556 F.Supp.2d 284, 287 (S.D.N.Y.2008) (“Zheng III ”). The court determined that, while there was no genuine issue of fact that the first, second, and fourth Zheng II factors weighed in the Liberty Defendants’ favor, there was a dispute of fact regarding factors three, five, and six. Id. at 289-95. On February 11, 2009, after a two-and-a-half week trial, the jury found in plaintiffs’ favor. The court denied the Liberty Defendants’ post-verdict motions to set aside the verdict and for a new trial. By final judgment entered October 26, 2009, plaintiffs were awarded $556,566.76 in damages.

Discussing the issues on this appeal, the Court framed them as: Whether “(1) the district court improperly allowed the jury to determine the “ultimate legal question” whether the Liberty Defendants were plaintiffs’ joint employer, whereas instead the court itself should have resolved that issue; (2) the district court refused to charge the jury that, as a matter of law, three of the six Zheng II factors weighed in the Liberty Defendants’ favor (to some degree); and (3) as a matter of law, plaintiffs’ evidence was insufficient to support the jury’s finding of joint employment. As to the § 345-a(1) claim, the Liberty Defendants argue that (1) the statute does not authorize a private right of action, and, alternatively, (2) whether it authorizes a private right of action raises a novel and complex issue of state law such that the district court should have declined to exercise supplemental jurisdiction over that claim, see 28 U.S.C. § 1367(c)(1).”

Holding that the Court below had correctly submitted the issue of joint-employment to the jury, the Court reasoned:

“In the context of a jury trial, the question whether a defendant is a plaintiffs’ joint employer is a mixed question of law and fact. Such questions “involve[ ] the application of a legal standard to a particular set of facts.”   Richardson v. N.Y. State Dep’t of Corr. Serv., 180 F.3d 426, 437 (2d Cir.1999) (internal quotation marks omitted). “FLSA claims typically involve complex mixed questions of fact and law….” Barrentine v. Arkansas-Best Freight Sys., 450 U.S. 728, 743 (1981); cf. Holzapfel v. Town of Newburgh, N.Y., 145 F.3d 516, 521 (2d Cir.1998).

The jury’s role was to apply the facts bearing on the multi-factor joint employment inquiry to the legal definition of joint employer, as that term had been (properly) defined by the district court in the jury charge. “[M]ixed questions [of law and fact] are ‘especially well-suited for jury determination….’ “ Richardson, 180 F.3d at 437 (quoting Mendell v. Greenberg, 927 F.2d 667, 673 (2d Cir.1990)); see also Kirsch v. Fleet St., Ltd., 148 F.3d 149, 171 (2d Cir.1998); Simms v. Vill. of Albion, N.Y., 115 F.3d 1098, 1110 (2d Cir.1997) (“A mixed question of fact and law may be submitted to the jury only if the jury is instructed as to the applicable legal standards.”).

In the Liberty Defendants’ view, the district court should have provided a special verdict form so that the jury could detail its factual findings regarding the various joint employment factors, and so that the district court could then have applied those findings to make the final determination as to joint employment. But such a rule would distort the jury’s proper role, described above, of applying law to fact. Moreover, requiring the use of a special verdict form would be anomalous in the law, cf. Fed.R.Civ.P. 49(a); Kirsch, 148 F.3d at 171; 9B C. Wright & A. Miller, Federal Practice & Procedure § 2505 (“Wright & Miller”); and appellate courts rarely-if ever-vacate for failure to use a special verdict form, see Skidmore v. Balt. & O.R. Co., 167 F.2d 54, 67 (2d Cir.1948) (“[W]e cannot hold that a district judge errs when, as here, for any reason or no reason whatever, he refuses to demand a special verdict, although we deem such verdict usually preferable to the opaque general verdict.”); Wright & Miller § 2505 (“[A]s numerous courts have held, as evidenced by the many cases cited in the note below, the exercise of th[e trial court’s discretion in using a general rather than a special verdict form] is not likely to be overturned on appeal.”).

The Liberty Defendants’ reliance on language from Zheng II is misplaced. That decision recognized that the joint employment question is a mixed one of law and fact: “Finally, there is the conclusion of law to be drawn from applying the factors, i.e., whether an entity is a joint employer.”   Zheng II, 355 F.3d at 76 (emphasis added); cf. id. at 76 n.13 (noting “[t]he fact-intensive character of the joint employment inquiry”). Moreover, to the extent Zheng II contemplated de novo review of a joint employment determination, it did so only in the context of summary judgment, not a jury trial. De novo review of a jury’s joint employment determination would necessitate use of a special verdict-which, as we explained above, we do not require-and would cause the appellate court to tease apart the interwoven elements of facts and law, a project that would raise serious Seventh Amendment concerns, cf. Castillo v. Givens, 704 F.2d 181, 199 (5th Cir.1983) (Higginbotham, J., concurring)-if it could even be done.

For the foregoing reasons, we hold that the district court properly submitted the joint employment issue to the jury. The judgment of the district court is affirmed, subject to the partial vacatur and remand required by the companion summary order. The mandate shall issue forthwith.”

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E.D.N.Y.: Alleged Operators Of Garment Factory May Constitute Plaintiffs’ Employers Or Joint Employers Under FLSA; Motion To Dismiss Denied

Lin v. Great Rose Fashion, Inc.

In this Fair Labor Standards Act (“FLSA”) case, Plaintiffs allege that they were deprived of a minimum wage and overtime pay while working in a garment factory, and ultimately discharged from their employment in retaliation for pursuing their rights to this compensation. Plaintiffs had previously moved for both a preliminary injunction and a TRO, based on alleged retaliatory conduct from Defendants, and allegations that Defendants were seeking to strip the factory where Plaintiffs had been employed of their assets. Of particular interest on the parties Motions currently before the Court, the Defendants sought to dismiss Plaintiffs’ claims based on alleged lack of standing—arguing that that Defendants were not Plaintiffs’ employers under the FLSA. Denying Defendants’ Motion to Dismiss based on lack of standing, the Court reviewed the elements of joint employers under the FLSA as well as those used to distinguish between independent contractors and employees. The Court held an evidentiary hearing and made factual findings regarding the nature of the parties’ relationship.

“Defendants argue that Plaintiffs lack standing to sue because they were not ‘employees,’ as defined in the FLSA, but rather ‘independent contractors.’ Defendants claim they ‘outsourced the packing and trimming work to Wen Ming Lin and Yu Jiao Lin,’ and Wen Ming Lin’ in turn employed a group of ‘independent contractors,’ the Packer Plaintiffs. In support of their view, Defendants assert that they did not hire, fire, supervise, or manage the workers. They claim that the ‘subcontractors’ maintained the other workers’ employment records, negotiated a pay rate for the group and collected checks on one desk, and that ‘the plaintiffs themselves decided when they should arrive, depart, and the amount of time for which they were to work.’

The evidence presented at the Hearing exposed each of these assertions to be patently false. Applying the Brock factors, there is simply no question that these Plaintiffs “depend[ed] upon someone else’s business for the opportunity to render service” and were not “in business for themselves.” See Brock, 840 F.2d at 1059. The Plaintiffs were low-skilled, immigrant piece-workers toiling for long hours of manual labor in a garment factory. At least one, Yu Jiao Lin, expressed that she was illiterate. The testimony of the Plaintiffs established that they were interviewed, hired, fired, assigned work and hours, and supervised and managed by Mrs. Lin and Fang Zhen, or others under their control. (Tr. 31, 33-36, 78-81.) Contrary to the Defendants’ assertions, there is no evidence that Wen Ming Lin or Yu Jiao Lin had the power to hire, fire, manage assignments and schedules, or discipline other workers. (Id.)

It is plain that Mrs. Lin and Fang Zhen exercised a degree of control over the workers commensurate with the role of an employer. The Defendants’ collective denial of control over the workers is not credible. Wen Ming Lin’s referral of prospective workers to Mrs. Lin for her to interview does not elevate him to the role of independent contractor. (Tr. 52-53.) The Defendants’ additional arguments are similarly unavailing and unsupported by the evidence. For example, the Defendants’ repeatedly point to a single paycheck issued on December 9, 2005 and marked “payment for the assigned contractors” as evidence that “Plaintiffs shared and shared alike,” creating a relationship “best [ ] characterized as a partnership.” (Def. Post-Hearing Opp. 3, Def. Ex. A.) The Defendants’ choice to unilaterally label the Plaintiffs “contractors,” and to attempt to pay them via a collective paycheck on one occasion years ago, does not control the legal question before the court. This crude argument fails to set the Plaintiffs apart as independent contractors.

Considering the remaining Brock factors, the Defendants’ “independent contractor” theory proves even more preposterous. There is zero evidence that Plaintiffs had any opportunity for profit or loss or an “investment” in the business. The packers and thread-cutters were engaged in low-skilled factory labor, which was obviously not a matter of “independent initiative.” The Plaintiffs who took the stand worked at the Factory on a permanent, daily basis for three years. Their work at the Factory was not an occasional project. The Plaintiffs performed discrete tasks that assisted the line production, assembly, and packaging of goods. It is clear that their work was “an integral part of the employer’s business.”

Defendants’ contrived efforts to distance themselves from their workers and treat them as “subcontractors” have failed. The Defendants’ argument is nothing more than a transparent attempt to use a legal fiction to escape liability for their alleged labor abuses. The notion that these Plaintiffs acted as independent contractors outside the protection of the FLSA is so thoroughly without merit that it borders on an affront to the dignity of this court.”

B. Silver Fashion and Mrs. Lin Constitute “Employers” Under the FLSA

As a matter of economic reality, the Plaintiffs were employed by the Factory and the entities that owned it over the years: Silver Fashion, Great Rose, and Spring Fashion. Under the Carter factors, Silver Fashion maintained formal control over the Plaintiffs through the actions of its principal managers. Since Mrs. Lin’s parents were absentee, nominal owners of the business, Mrs. Lin controlled the company. The persistent euphemism that Mrs. Lin was just “helping out” her parents and that Fang Zhen was “helping” Mrs. Lin cannot be taken seriously. The only conceded owners or managers of Silver Fashion were Mrs. Lin’s parents, who live in China and appear to have no involvement whatsoever in the operations of this company held in their names. As Mrs. Lin eventually summarized: “Basically I was running the company.”(Tr. 262.)

As reviewed above, Plaintiffs were interviewed, hired, fired, assigned work and hours, and supervised and managed by Mrs. Lin and Fang Zhen, or others under their control. (Tr. 31, 33-36, 78-81.) There is no serious dispute that Mrs. Lin or others acting on her behalf determined the rate and method of payment. Mrs. Lin also maintained employment records, as demonstrated by the Defendants’ production of the Weekly Trim/Packing Reports. (See Def. Ex. A (original records in blue ink).) These records purport to show the quantity and price of the piecework performed by the Packer Plaintiffs, which formed the basis for their weekly compensation. At a minimum, Plaintiffs have standing to sue Silver Fashion, its predecessor entities, and Mrs. Lin under the FLSA. The court reserves judgment pending discovery as to the role of Fang Zhen in the employment scheme.

C. Great Wall and Mr. Lin May Constitute Joint Employers Under the FLSA

Defendants also argue that the case should be dismissed as to Great Wall and Mr. Lin, because they had no “operational control” over the Plaintiffs. (Def. Post-Hearing Opp. 10-15.) The agency regulations promulgated under the FLSA expressly recognize that a worker may be employed by more than one entity at the same time. See29 C.F.R. § 791.2 (2003); Zheng, 355 F.3d at 66 (citing Torres-Lopez v. May, 111 F.3d 633, 639-45 (9th Cir.1997) (permitting claims against joint employers under the FLSA); Antenor v. D & S Farms, 88 F.3d 925, 929-38 (11th Cir.1996) (same)). Plaintiffs have standing to sue Great Wall and Mr. Lin, in addition to the other Defendants, if they exercised “functional control” over the Factory and its workers. See Barfield, 537 F .3d at 143;
Zheng, 355 F.3d at 66, 72.

Discovery is needed to determine whether a functional employment relationship existed between the Plaintiffs and Great Wall under the Zheng factors. The economic reality test intentionally reaches beyond traditional concepts of agency law to encompass “working relationships, which prior to [the FLSA], were not deemed to fall within an employer-employee category.” Zheng, 355 F.3d at 69 (quoting Walling v. Portland Terminal Co., 330 U.S. 148, 150-51 (1947)). Under the theory of functional control, “an entity can be a joint employer under the FLSA even when it does not hire and fire its joint employees, directly dictate their hours, or pay them.” Zheng, 355 F.3d at 70 (interpreting Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947)). Evidence already establishes that purported agents of Great Wall-Mrs. Lin and Fang Zhen, who each testified that they were employed exclusively by Great Wall-supervised the Plaintiffs’ work in the Factory. The ownership of the premises and the equipment used in the Factory could be imputed to Great Wall, given the tangled leasing relationships between Mr. and Mrs. Lin and the fact that the Factory’s space was distinguished from Great Wall’s space by nothing more than a pile of paper boxes. The Second Circuit has also recognized that a company can de facto set employees’ wages and “dictate[ ] the terms and conditions” of their employment, though they do not “literally pay the workers,” where those employees perform work exclusively in service of that company. Id. at 72.In effect, Plaintiffs functionally worked for Great Wall, because they worked in a Factory that manufactured garments exclusively for Great Wall. Upon review of the preliminary evidence before the court, the relationship between Plaintiffs and Silver Fashion appears to have had “no substantial, independent economic purpose” beyond serving as a “subterfuge meant to evade the FLSA or other labor laws” for the benefit of Great Wall.Id.

In light of the court’s obligation to look beyond the strictures of formal tests and consider all relevant facts, the court finds that Defendants’ dubious uses of the corporate form and the interlocking relationships between the Defendant Corporations are pertinent to the joint employer inquiry in this case. Defendants’ attempt to distinguish Great Wall as a mere “customer of Silver Fashion” is a fallacy. Nearly every aspect of these businesses was intertwined. Together, the Lins controlled both companies. Mr. Lin owned Great Wall, and his wife operated Silver Fashion. Mrs. Lin’s parents appear to be nothing more than straw owners of Silver Fashion. Great Wall was Silver Fashion’s landlord and sole client. Silver Fashion manufactured garments exclusively for Great Wall. In turn, Mr. Lin could not identify a single supplier to his company other than Silver Fashion. Mrs. Lin owned the building where both companies were housed, yet leased the entire building to a company wholly controlled by her husband, so that he could sublet part of it back to her parents for $18,000 a month. (See Section II.A supra.)From the rent and the garment sales, significant funds flowed between these related companies on a regular basis. These entities were functioning as complementary components of a single business enterprise.FN9Based upon these facts, Plaintiffs may have standing to hold Great Wall and Mr. Lin liable either as their functional employers or under other legal theories. The court denies Defendants’ Motion to Dismiss for lack of standing in its entirety.”

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