[Federal Register Volume 61, Number 62 (Friday, March 29, 1996)]
[Proposed Rules]
[Pages 14035-14039]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7818]



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DEPARTMENT OF LABOR

Employment Standards Administration; Wage and Hour Division

29 CFR Part 500

RIN 1215-AA93


Migrant and Seasonal Agricultural Worker Protection Act

AGENCY: Wage and Hour Division, Employment Standards Administration, 
Labor.

ACTION: Notice of proposed rulemaking, request for comments.

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SUMMARY: This document proposes regulations to amend the definition of

[[Page 14036]]
``employ'' under the Migrant and Seasonal Agricultural Worker 
Protection Act (MSPA). Consistent with Executive Order 12866, which 
concerns regulatory planning and review (see 58 Fed. Reg. 51735 (Oct. 
4, 1993)), this document proposes to amend MSPA regulations to clarify 
and make easier to understand the definition of ``independent 
contractor'' and ``joint employment'' under MSPA, with the goal of 
minimizing the potential for uncertainty and litigation arising from 
such uncertainty and to better guide the Department's enforcement 
activities.

DATES: Comments on the proposed rule are due on or before June 12, 
1996.

ADDRESSES: Submit written comments to Maria Echaveste, Administrator, 
Wage and Hour Division, Employment Standards Administration, U.S. 
Department of Labor, Room S-3502, 200 Constitution Avenue, NW., 
Washington, DC 20210. Commenters who wish to receive notification of 
receipt of comments are requested to include a self-addressed, stamped 
post card or to submit them by certified mail, return receipt 
requested. As a convenience to commenters, comments may be transmitted 
by facsimile (``FAX'') machine to (202) 219-5122. This is not a toll-
free number. If transmitted by FAX and a hard copy is also submitted by 
mail, please indicate on the hard copy that it is a duplicate copy of 
the FAX transmission.

FOR FURTHER INFORMATION CONTACT: Michael Hancock, Office of Enforcement 
Policy, Farm Labor Team, Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, Room S-3510, 200 Constitution 
Avenue, NW., Washington, DC 20210; telephone (202) 219-7605. This is 
not a toll-free number. Copies of this NPRM in alternative formats may 
be obtained by calling (202) 219-7605, (202) 219-4634 (TDD). The 
alternative formats available are large print, electronic file on 
computer disk and audio-tape.

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act of 1995

    This proposed rule contains no reporting or recordkeeping 
requirements subject to the Paperwork Reduction Act of 1995 (Pub. L. 
104-13).

II. Background

    The MSPA definition of ``joint employment,'' 29 CFR 500.20(h)(4), 
is proposed to be amended to clarify and provide more accurate and 
complete information to the regulated community, thereby making the 
MSPA regulations more ``user-friendly.'' The proposed regulation 
comports more fully with (1) the Fair Labor Standards Act (FLSA) 
regulations at 29 CFR 791; (2) seminal court decisions regarding the 
employment relationship; and (3) the MSPA legislative history.
    The MSPA statutory definition of ``employ'', 29 U.S.C. 1803(3)(5), 
from which the concept of ``joint employment'' is drawn, is the FLSA 
statutory definition of ``employ'', 29 U.S.C. 203(g), incorporated by 
reference. In keeping with the President's executive order directive to 
Federal agencies to identify rules that could be clarified to provide 
more complete and understandable guidance to the regulated community, 
the Department proposes to amend the MSPA ``joint employment'' 
regulation. The Department has notified the public and the regulated 
community of its intention, through the regulatory agenda and 
regulatory planning process, to amend this regulation. See 60 Fed. Reg. 
23546 (May 8, 1995) and 60 Fed. Reg. 59614 (Nov. 28, 1995).

III. Summary and Discussion

Joint Employment Standard Under MSPA

    The Department proposes to amend the MSPA regulation defining the 
employment and joint-employment relationship in agriculture. Having 
reviewed this regulation in the normal course of DOL operations, the 
Department recognizes the need for a clearer and more complete 
regulation setting forth the applicable criteria, thereby making the 
regulation more ``user-friendly.'' The purpose of the amendment is to 
clarify the regulation and, thus, to avoid confusion and misapplication 
of the standards to be considered in determining the existence of the 
employment and joint-employment relationship. A further purpose is to 
update the regulation to reflect more completely the Congressional 
intent in the enactment of MSPA, the state of the law, and the 
Department's understanding of the employment and joint employment 
standard.
    The Department has intended for some time to up-date and clarify 
this MSPA regulation. The matter has been included in the DOL 
regulatory agendas published in the Federal Register (60 FR 23546 (May 
8, 1995); 60 FR 59614 (November 28, 1995)). The present proposed 
rulemaking undertakes the previously announced revision of the 
employment and joint employment definition.
    The current MSPA ``joint employment'' regulation identifies 
particular factors which should be considered in determining the 
existence of such relationships in the agricultural context. This 
Departmental guidance appears to be subject to some misunderstanding in 
the regulated community and the courts with regard to the applicability 
of the legal standards under MSPA and the Fair Labor Standards Act, 
which contain the identical statutory standard.1 It is the 
Department's view that the MSPA ``joint employment'' regulation should 
be modified to focus more closely on the ultimate test for employment 
and joint employment as established by the federal courts, i.e., 
``economic dependence,'' and to further clarify the multi-factor 
analysis to be used to determine the existence of ``economic 
dependence'' in the agricultural context. Such a clarified regulation 
will ensure more consistent application of the FLSA principles of 
employment and ``joint employment'' under MSPA, and will also ensure 
the full implementation of the Congressional intent in adopting those 
principles in MSPA.

    \1\  Compare: Hodgson v. Griffin & Brand of McAllen, Inc., 471 
F.2d 235 (5th Cir.), cert. denied, 414 U.S. 819 (1973), with Aimable 
v. Long and Scott Farms, 20 F.3d 434 (11th Cir.), cert. denied, 115 
S.Ct. 351 (1994).
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Legislative and Judicial Basis for ``Joint Employment''

    The FLSA defines the term employ as meaning ``to suffer or permit 
to work'' (29 U.S.C. 203(g)), and the courts have given an expansive 
interpretation to the statutory definition of employ under the FLSA in 
order to accomplish the remedial purposes of the Act.2 In 
accordance with the FLSA's broad definitions and remedial purposes, the 
traditional common law ``right to control'' test has been rejected in 
interpreting the FLSA definition of employ. Instead, the test of an 
employment relationship under the FLSA is ``economic dependence,'' 
which requires an examination of the relationships among the employee 
and the putative employer(s) to determine upon whom the employee is 
economically dependent.3 The determination of economic dependence 
is based upon the ``economic reality'' of all the circumstances and not 
upon isolated factors or contractual labels.4 Since the ``economic 
reality'' test first delineated by the Supreme Court in Rutherford 
Food, the courts have uniformly considered a number of factors, no one 
of which is

[[Page 14037]]
determinative. Instead, the multi-factor analysis is a means of gauging 
whether the worker is economically dependent on the business(es) for 
which the worker is ``suffered or permitted to work'' and whether the 
nature and degree of that dependence constitutes an employment 
relationship within the intended protections of the FLSA.

    \2\  See Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 
(1947).
    \3\ See Real v. Driscoll Strawberry Assoc., Inc., 603 F.2d 748 
(9th Cir. 1979); Griffin & Brand, supra.
    \4\ Rutherford Food; Griffin & Brand, supra.
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    The joint employment doctrine, which has long been recognized under 
the FLSA case law,\5\ is defined by the FLSA regulation to mean a 
condition in which ``[a] single individual stands in the relation of an 
employee to two or more persons at the same time'' (29 CFR 791.2(a)). A 
joint employment relation is found when ``employment by one employer is 
not completely disassociated from employment by the other employer,'' 
such a determination depending upon ``all the facts in the particular 
case.'' Id.

    \5\ Griffin & Brand, supra.
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    Under MSPA, the term employ has the same meaning as that term under 
the FLSA. 29 U.S.C. 1802(5). Congress enacted this express 
incorporation of the FLSA definition of employ with the deliberate 
intention of adopting the FLSA case law defining employment and joint 
employment. Congress specifically stated that the ``joint employer 
doctrine'' articulated under the FLSA was to serve as the ``central 
foundation'' of the MSPA and ``the best means by which to ensure that 
the purposes of this Act would be fulfilled.'' 6 Congress intended 
the joint employer doctrine to serve as a vehicle for protecting 
agricultural employees ``by fixing the responsibility on those who 
ultimately benefit from their labors--the agricultural employer.'' 
7 In declaring this purpose, Congress cited with approval the 
joint employment analysis utilized by the Court of Appeals in Griffin & 
Brand; thus, that decision should be the benchmark for the analysis in 
the agricultural setting.8 The multi-factor test, as stated in 
Griffin & Brand, is largely the same as the Supreme Court's seminal 
decision in Rutherford Food, although the Court of Appeals restated 
some factors to comport more fully and realistically with the unique 
characteristics of an agricultural operation.

    \6\ H. Rep. No. 97-885, 97th Cong. 2d sess. pp. 6-7 [``Rept.''].
    \7\  128 Cong. Rec. H26008 (Sept. 1982).
    \8\  Rept. 7.
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    The current MSPA regulation, promulgated in 1983, sets out a non-
exclusive list of factors which could appropriately be considered in 
the joint employment analysis. 29 CFR 500.20(h)(4)(ii). The regulation 
states that the ``. . . determination of whether the employment is to 
be considered joint employment depends upon all the facts in the 
particular case.'' 29 CFR 500.20(h)(4)(i). The factors identified in 
the regulation were not intended by the Department to be a checklist 
for determining a joint employment relationship; nor were the factors 
intended to be given greater weight than other relevant factors 
presented in a particular case or developed in the case law. To the 
extent that courts and the regulated community may have strayed from 
the ``economic reality''/``economic dependence'' analysis by applying 
the regulation as a rigid checklist, or treating the regulation as an 
exclusive list which precludes consideration of additional factors 
(e.g., whether workers' activities are an integral part of the putative 
employer's operation), or distorting or placing undue emphasis on 
particular factors (e.g., ``control'' misconstrued as being direct 
supervision of workers' activities), the regulation is not only 
misinterpreted but is also being applied so as to frustrate the express 
intention of Congress in enacting MSPA.

Proposed ``Joint Employer'' Rule

    In order to resolve any confusion or misunderstanding of the 
current MSPA regulation and to provide clearer and more complete 
guidance to the regulated community, the regulation is proposed to be 
amended to better delineate the appropriate analysis of the employment 
and joint employment relationships using ``economic dependence'' as the 
touchstone, as contemplated by Congress when MSPA was enacted. The 
proposed regulation also addresses the crucial, initial issue of 
whether a farm labor contractor (FLC) is a bona fide independent 
contractor or an employee of the agricultural association or 
agricultural employer; where an FLC is actually an employee of the 
agricultural employer or association, any worker employed by the FLC is 
necessarily also an employee of the FLC's employer. The proposed 
regulation more clearly enunciates the proper test for joint 
employment, as prescribed in the legislative history and set forth in 
the case law that has properly focused on economic reality and economic 
dependence. Further, the regulation will provide needed guidance on 
``control,'' clarifying that the inquiry is as to the putative 
employer's power or right to exercise authority in the workplace, 
either directly or indirectly; the actual exercise of such power or 
authority is not necessary. The regulation would be further clarified, 
in that the illustrative list of factors eliminates redundancy (e.g., 
items in the current regulation dealing with aspects of control are 
consolidated) and provides more complete guidance as to appropriate 
consideration of factors. Comments are requested concerning the factors 
listed, in particular whether or not additional factors should be 
included in the illustrative list of factors.

Executive Order 12866/Section 202 of the Unfunded Mandates Reform 
Act of 1995

    This proposed rule is not ``economically significant'' within the 
meaning of Executive Order 12866, nor does it require a Sec. 202 
statement under the Unfunded Mandates Reform Act of 1995. However, 
because the rule may raise novel legal or policy issues arising out of 
legal mandates, it has been determined by OMB to be a ``significant 
regulatory action'' within the meaning of Sec. 3(f)(4) of Executive 
Order 12866. The proposed rule proposes to amend the MSPA regulations 
to clarify the concepts of employ, employer, employee, and joint 
employment. No economic analysis is required because the rule will not 
have a significant economic impact.

Regulatory Flexibility Analysis

    This proposed rule will not have a significant economic impact on a 
substantial number of small entities. The Department has certified to 
this effect to the Chief Counsel for Advocacy of the Small Business 
Administration. The proposed rule contains language which is intended 
to clarify what is meant by the terms employ, employer, employment, and 
joint employment under MSPA.

Document Preparation

    This document was prepared under the direction and control of Maria 
Echaveste, Administrator, Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor.

List of Subjects in 29 CFR Part 500

    Agricultural employers, Agricultural associations, Agricultural 
worker, Employ, Employee, Employer, Farm labor contractor, Independent 
Contractor, Joint Employment, Migrant agricultural workers, Migrant 
labor, Seasonal agricultural workers.


[[Page 14038]]

    Signed at Washington, D.C., on this 26th day of March, 1996.
John R. Fraser,
Deputy Administrator, Wage and Hour Division.

    For the reasons set forth above, 29 CFR part 500 is proposed to be 
amended as set forth below:

PART 500--MIGRANT AND SEASONAL AGRICULTURAL WORKER PROTECTION

    1. The authority citation for Part 500 is revised to read as 
follows:

    Authority: Pub. L. 97-470, 96 Stat. 2583 (29 U.S.C. 1801-1872); 
Secretary's Order No. 6-84, 49 FR 32473.

    2. In Sec. 500.20, paragraph (h)(4) is revised and paragraph (h)(5) 
is added to read as follows:


Sec. 500.20  Definitions.

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    (h) * * *
    (4) The definition of the term employ may include consideration of 
whether or not an independent contractor or employment relationship 
exists under the Fair Labor Standards Act. Under MSPA, questions will 
arise whether or not the farm labor contractor engaged by the 
agricultural employer/association is a bona fide independent contractor 
or an employee. Questions also arise whether or not the worker is a 
bona fide independent contractor or an employee of the farm labor 
contractor and/or the agricultural employer/association. These 
questions should be resolved in accordance with the factors set out 
below and the principles articulated by the federal courts in 
Rutherford Food Corp.v. McComb, 331 U.S. 722 (1947), Real v. Driscoll 
Strawberry Assoc., Inc., 603 F.2d 748 (9th Cir. 1979), and Sec'y of 
Labor, U.S. Dept. of Labor v. Lauritzen, 835 F.2d 1529 (7th Cir. 1987). 
If it is determined that the farm labor contractor is an employee of 
the agricultural employer/association, the agricultural workers in the 
farm labor contractor's crew who perform work for the agricultural 
employer/association are deemed to be employees of the agricultural 
employer/association and an inquiry into joint employment is not 
necessary or appropriate. In determining if the worker or farm labor 
contractor is an employee or an independent contractor, the ultimate 
question is the economic reality of the relationship--whether there is 
economic dependence upon the farm labor contractor or agricultural 
employer/association, as appropriate. This determination is based upon 
an evaluation of all of the circumstances, including the following:
    (i) The nature and degree of the putative employer's control as to 
the manner in which the work is performed;
    (ii) The putative employee's opportunity for profit or loss 
depending upon his managerial skill;
    (iii) The putative employee's investment in equipment or materials 
required for the task, or the putative employee's employment of other 
workers;
    (iv) Whether the services rendered by the putative employee 
requires special skill;
    (v) The degree of permanency and duration of the working 
relationship;
    (vi) The extent to which the services rendered by the putative 
employee are an integral part of the putative employer's business.
    (5) The definition of the term employ includes the joint employment 
principles applicable under the Fair Labor Standards Act. The term 
joint employment means a condition in which a single individual stands 
in the relation of an employee to two or more persons at the same time. 
A determination of whether the employment is to be considered joint 
employment depends upon all the facts in the particular case. If the 
facts establish that two or more persons are completely disassociated 
with respect to the employment of a particular employee, a joint 
employment situation does not exist.
    (i) If it is determined that the farm labor contractor is an 
independent contractor, it still must be determined whether or not the 
employees of the farm labor contractor are also jointly employed by the 
agricultural employer/association. Joint employment under the Fair 
Labor Standards Act is joint employment under the MSPA. Such joint 
employment relationships, which are common in agriculture, have been 
addressed both in the legislative history and by the courts.
    (ii) The legislative history of the Act (H. Rep. No. 97-885, 97th 
Cong., 2d Sess., 1982) states that the legislative purpose in enacting 
MSPA was ``to reverse the historical pattern of abuse and exploitation 
of migrant and seasonal farm workers . . .,'' which would only be 
accomplished by ``advanc[ing] . . . a completely new approach'' (Rept. 
at 3). Congress's incorporation of the FLSA term employ was undertaken 
with the deliberate intent of adopting the FLSA joint employer doctrine 
as the ``central foundation'' of MSPA and ``the best means by which to 
insure that the purposes of this MSPA would be fulfilled'' (Rept. at 
6). Further, Congress intended that the joint employer test under MSPA 
be the formulation as set forth in Hodgson v. Griffin & Brand of 
McAllen, Inc. 471 F.2d 235 (5th Cir.), cert. denied, 414 U.S. 819 
(1973) (Rept. at 7). In endorsing Griffin & Brand, Congress stated that 
this formulation should be controlling in situations ``where an 
agricultural employer . . . asserts that the agricultural workers in 
question are the sole employees of an independent contractor/
crewleader,'' and that the ``decision makes clear that even if a farm 
labor contractor is found to be a bona fide independent contractor, . . 
. this status does not as a matter of law negate the possibility that 
an agricultural employer may be a joint employer . . . of the harvest 
workers'' together with the farm labor contractor. Further, regarding 
the joint employer doctrine and the Griffin & Brand formulation, 
Congress stated that ``the absence of evidence on any of the criteria 
listed does not preclude a finding that an agricultural association or 
agricultural employer was a joint employer along with the crewleader'', 
and that ``it is expected that the special aspects of agricultural 
employment be kept in mind'' when applying the tests and criteria set 
forth in the case law and legislative history (Rept. at 8).
    (iii) In determining whether or not an employment relationship 
exists between the agricultural employer/association and the 
agricultural worker, the ultimate question to be determined is the 
economic reality--whether the worker is so economically dependent upon 
the agricultural employer/association as to be considered its employee, 
subject to MSPA protections.
    (iv) The factors set forth below are analytical tools to be used in 
determining the ultimate question of economic dependency. The factors 
are not to be applied as a checklist. They are illustrative only and 
are not intended to be exhaustive; other factors may be considered, 
depending upon the specific circumstances of the relationship among the 
parties. No one factor is critical to the analysis; nor must a majority 
of the factors be found for an employment relationship to exist. 
Rather, how the factors are weighed depends upon all of the facts and 
circumstances. Among the factors to be considered in determining 
whether or not an employment relationship exists are:
    (A) Whether the agricultural employer/association has the power, 
either alone or through control of the farm labor contractor to direct, 
control, or supervise the worker(s) or the work performed (such control 
may be either direct or indirect, and may be either exercised or 
unexercised, taking into

[[Page 14039]]
account the nature of the work performed);
    (B) Whether the agricultural employer/association has the power, 
either alone or in addition to another employer, directly or 
indirectly, to hire or fire, modify the employment conditions, or 
determine the pay rates or the methods of wage payment for the 
worker(s);
    (C) Whether the agricultural employer/association supplies housing, 
transportation, tools and equipment or materials required for the job;
    (D) The degree of permanency and duration of the relationship of 
the parties, in the context of the agricultural activity at issue;
    (E) The extent to which the services rendered by the workers are 
repetitive, rote tasks requiring skills which are acquired with 
relatively little training;
    (F) Whether the activities performed by the worker are an integral 
part of the overall business operation of the agricultural employer/
association;
    (G) Whether the work is performed on the agricultural employer/
association's premises or on the premises owned or controlled by 
another business entity;
    (H) Whether the agricultural employer/association undertakes 
responsibilities in relation to the worker which are normally performed 
by employers, such as maintaining payroll records, preparing and/or 
issuing pay checks, paying FICA taxes, providing workers' compensation 
insurance, or providing field sanitation facilities; and
    (I) Other facts bearing on economic dependency.
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[FR Doc. 96-7818 Filed 3-28-96; 8:45 am]
BILLING CODE 4510-27-P