[Federal Register Volume 62, Number 48 (Wednesday, March 12, 1997)]
[Rules and Regulations]
[Pages 11734-11748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6036]
[[Page 11733]]
_______________________________________________________________________
Part X
Department of Labor
_______________________________________________________________________
Wage and Hour Division
_______________________________________________________________________
29 CFR Part 500
Migrant and Seasonal Agricultural Worker Protection Plan; Final Rule
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 /
Rules and Regulations
[[Page 11734]]
DEPARTMENT OF LABOR
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: Final rule.
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SUMMARY: This document amends the regulations concerning the definition
of ``employ'' under the Migrant and Seasonal Agricultural Worker
Protection Act (MSPA) to include a definition of ``independent
contractor'' and to clarify the definition of ``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: This final rule is effective April 11, 1997.
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 Final Rule 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 Final Rule contains no reporting or recordkeeping requirements
subject to the Paperwork Reduction Act of 1995 (Pub. L. 104-13).
II. Background
The MSPA statutory definition of ``employ'', 29 U.S.C. 1802(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. The MSPA definition of ``joint employment,'' 29 CFR
500.20(h)(4), is amended by this Final Rule to clarify and provide more
accurate and complete information to the regulated community, thereby
making the MSPA regulations more ``user-friendly.'' The regulation, as
amended, 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. In
keeping with the President's Executive Order directive (No. 12866,
``Regulatory Planning and Review,'' September 30, 1993 [58 FR 51735
(October 4, 1993)]) to Federal agencies to identify rules that could be
clarified to provide more complete and understandable guidance to the
regulated community, the Department is amending the MSPA ``joint
employment'' regulation. The Department published a Notice of Proposed
Rulemaking in the Federal Register on March 29, 1996 (61 FR 14035-
14039). The public comment period on the proposed regulatory changes
closed on June 12, 1996.
III. Comments to the Proposed Regulatory Revision
A. Comments to the Proposed Rule
Comments to the Notice of Proposed Rulemaking (NPRM) were received
from organizations, public officials and individuals representing the
views of members of Congress, farmworker advocacy groups, farmworker
labor unions, agricultural associations, agricultural employers,
farmworker legal services programs, religious organizations serving
farmworkers, lawyers representing farmworkers, and individuals. These
41 comments were submitted on behalf of over 91 organizations and
individuals, 63 generally supportive of the NPRM and 28 generally
opposed. The Department also received comments from the United States
Department of Agriculture (USDA) after the public comment period and
during the course of review of the final regulation pursuant to
Executive Order 12866.
The commenters were broadly representative of two points of view:
those who support the NPRM, and those who oppose the proposal and
contend it should be withdrawn. The supporters of the NPRM assert that
the change in the regulation is necessary to correct the confusion
which has developed under the current regulation, and that the proposal
accurately reflects the law governing the determination of independent
contractor and joint employment status. Those opposed to the NPRM
contend that it effectively creates a ``strict liability'' 1 rule
which will automatically result in the determination that an
agricultural employer who uses a farm labor contractor is a joint
employer of the workers in the contractor's crew. Consequently, these
commenters suggest that the NPRM be withdrawn and the current
regulation be left undisturbed.
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\1\ Strict liability as used by the commenters appears to mean
``per se'' liability. Per se liability in this context means that
agricultural employers/associations are responsible for violations
committed by the farm labor contractor if they merely retain or
benefit from the services of the farm labor contractor.
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The comments from the Members of Congress, farmworker unions,
service organizations, and legal services programs primarily focused on
two subjects: the broad scope of ``employ'' in MSPA (particularly as it
pertains to the statutory term ``suffer or permit to work'') which is
the statutory basis of ``independent contractor'' and ``joint
employment''; and suggested changes to the precise formulation of the
analytical factors set forth in the NPRM. The comments from
agricultural employers and associations also focused on two subjects:
asserting that the Department was creating a strict liability joint
employment standard which would always result in a finding of joint
employment whenever an agricultural employer/association utilizes the
services of a farm labor contractor; and questioning the Department's
legal authority to adopt the proposed regulation.
B. Summary of Comments
1. Members of Congress
A joint comment was submitted by Rep. George Miller and Rep. Howard
Berman supporting the Department's proposed rule.
2. Agricultural Employers and Associations
Comments were submitted by Agricultural Producers, American Farm
Bureau Federation, California Grape and Tree Fruit League, Florida
Fruit and Vegetable Association, Hood River Grower-Shipper Association,
Maine Farm Bureau Association, Michigan Farm Bureau, Midwest Food
Producers Association, National Cotton Ginners' Association, New
England Apple Council, Nisei Farmers League, Pennsylvania Farm Bureau,
United States Sugar Corporation, Venture County Agricultural
Association, Virginia Farm Bureau Federation, Washington State Growers
Clearing House Association, and the Washington State Farm Bureau. All
of these comments struck common themes most fully expressed in the
comments from the National Council of Agricultural Employers (NCAE).
NCAE asserts that the NPRM proposes to create an unlawful strict
liability joint employment standard for agricultural employers or
associations who use the
[[Page 11735]]
services of farm labor contractors, and the Department has not stated a
legally sufficient factual basis for the proposed regulatory change.
The NCAE comments will be addressed below.
In addition to NCAE and other similar comments, three agricultural
organizations submitted comments that addressed issues not fully
explored in the NCAE comments. The American Pulpwood Association and
the American Forest & Paper Association both suggest that reforestation
contractors which the industry engages are independent contractors and
would not be joint employers with the industry under the proposed rule.
Further, these organizations suggest that the Department should clarify
the analytical factor--set out in the NPRM at 500.200(h)(5)(iv)(H)--
pertaining to the maintenance of payroll records and provision of field
sanitation facilities. These issues are addressed below.
Florida Citrus Mutual (FCM) submitted comments in which it contends
that the primary test for joint employment is control, i.e., who
exercises direct control over the workers. Further, FCM contends that
the House Education and Labor Committee Report relied upon by the
Department in developing the NPRM is neither lawful nor appropriate
guidance. Finally, FCM suggests that some of the listed analytical
criteria are inappropriate for the joint employment determination.
These issues too are addressed below.
3. Labor Organizations, Farmworker Advocates, Legal Services
Organizations and Attorneys
Comments submitted by the American Federation of Labor and Congress
of Industrial Organizations (AFL-CIO), California Rural Legal
Assistance, California Rural Legal Assistance Foundation, Columbia
Legal Services of Washington, Farmworker Justice Fund, Friends of
Farmworkers of Pennsylvania, Garry Geffert, Migrant Farmworker Justice
Project of Florida, Migrant Legal Action Program, National Council of
La Raza, North Carolina Council of Churches, the United Farm Workers of
America, and United Farm Workers-Texas Division, on behalf of
themselves and many other organizations, generally supported the
proposed regulations. These comments endorsed the general approach of
the NPRM but suggested that additional changes should be considered to
make the definitions of ``employ,'' ``independent contractor,'' and
``joint employment'' clearer and unambiguous.
C. Analysis of Comments
1. Congressional Comments
Representatives George Miller and Howard Berman support the NPRM,
stating that it implements the legislative intent to create a broad
standard of coverage under MSPA by incorporating the definition of
``employ'' from the Fair Labor Standards Act (FLSA). Further, their
joint comment contends that the NPRM corrects the current regulation's
incomplete and inaccurate guidance to the public and the courts
concerning the scope of employer responsibility under MSPA. The
commenters also assert that Congress intentionally adopted an expansive
definition of ``employ'' when it incorporated the FLSA definition and
eschewed the traditional common law ``right to control'' test. 2
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\2\ H.R. Rep. No. 885, 97th Cong., 2d Sess. 1, reprinted in 1982
U.S.C.C.A.N. 4547 (''House Comm. Rept.'').
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The Congressional commenters further state that in the enactment of
MSPA, Congress recognized that the adoption of the broad FLSA
definition of ``employ'' would result in the frequent imposition of
liability on growers because the types of relationships Congress
intended to cover through joint employment are common in agriculture.
In floor debate on the bill, Rep. Miller (a cosponsor) had pointed out
that the FLSA concept of joint employment ``presented the best means by
which to insure that the purpose of this Act would be fulfilled''
3 and that incorporating FLSA joint employment into MSPA would fix
`` * * * responsibility on those who ultimately benefit from [the
workers'] labor--the agricultural employer.'' 4
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\3\ 128 Cong. Rec. 26,009 (1982) (statement of Rep. George
Miller).
\4\ Id, at 26,008.
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For these and other reasons stated in their comment, the
Congressional commenters support the proposed rule and urge its speedy
adoption.
2. The American Pulpwood Association and American Forest and Paper
Association
The American Pulpwood Association (AP Assoc.) and American Forest &
Paper Association (AF&PA) contend the proposed regulation fails to
afford primacy to the common law test of ``right to control'' in
determining joint employment. According to AP Assoc. and AF&PA, the
test for joint employment is properly viewed as a question of the
contractual relationship between the farm labor contractor (FLC) and
the agricultural employer/association. Further, the organizations
assert that under this analysis the typical arrangement in the
reforestation industry will fall outside the scope of joint employment.
The Department disagrees that the proper legal analysis should turn
exclusively on contractual arrangements among an FLC and the
agricultural employer/association. The proposed rule is carefully
crafted to reflect the analytical framework within which a
determination of independent contractor and joint employment is to
occur. Because such an analysis is dependent on all the facts of a
particular situation, it is impossible to conclude that the
relationships described by these commenters as typical in the
reforestation context--that is, where the reforestation contractor has
all the indicia of common law right to control--could not result in a
determination of joint employment.
The current regulation and the proposed amendment make clear that
neither independent contractor nor joint employment determinations
under MSPA are reached only by the ``traditional common law test of
'right to control''' as suggested by the AP Assoc. and the AF&PA. While
``right to control'' is one of several factors that must be considered
in the analysis, the absence of such control on the part of a forestry
company does not conclusively determine that a reforestation contractor
is a bona fide independent contractor or that there is no joint
employment relationship between the forestry operator and the workers
in the reforestation crew. As stated in the proposed regulation, the
determination ``depends upon all the facts in the particular case * * *
[n]o one factor is critical to the analysis * * *''5 Contractual
designations or notions of common law control, while certainly
relevant, are not controlling.
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\5\ Sec. 500.20(h)(5),(h)(5)(iv).
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The AP Assoc. and the AF&PA also contend that it is inappropriate
to include ``maintaining payroll records'' as a factor in the joint
employer analysis at proposed regulation 500.20(h)(5)(iv)(H). The
associations point out that an agricultural employer or association is
obligated under MSPA to ``retain'' and ``keep'' payroll records created
by a farm labor contractor, regardless of joint employer status. The
associations suggest that the proposed rule would use this legal
obligation as a factor in determining joint employment and thus creates
an untenable choice for the agricultural employer or association:
``retain'' and ``keep'' these FLC payroll records (''maintain'' them)
and thereby create indicia of employment that will come to
[[Page 11736]]
play in a joint employment analysis, or violate the law by not
maintaining the FLC payroll records in order to avoid that result. The
associations' concern in this regard is based on what the Department
views as a reasonable but unintended interpretation of the word
``maintaining'' in the proposed rule. This word is used in the proposed
rule in the active sense of ``preparing'' or ``making,'' rather than in
the passive sense of merely ``retaining'' or ``keeping.'' However, the
Department agrees that some clarification in the regulatory language
would be helpful in order to convey that the proper consideration is
not who ``retains'' the payroll records but rather who ``prepares or
makes'' the payroll records. The obligation to ``make'' payroll records
is clearly an employer function under MSPA, 29 CFR 500.80(a), and is
appropriate to consider in the joint employer analysis. The Final Rule
provides this clarification.
The AP Assoc. and the AF&PA suggest that a similar flaw exists in
the proposed regulation at 500.20(h)(5)(iv)(H) regarding the provision
of field sanitation facilities. The Department does not agree. While
retaining copies of FLC-created payroll records is not indicative of
employer status, the provision of field sanitation facilities is an
obligation which rests with employers under the Occupational Safety and
Health Act regulations.6 When a putative employer voluntarily
assumes responsibility for workplace obligations that the law imposes
on employers, this voluntary assumption of such responsibility
indicates the putative employer's assumption of employer status for
other purposes and is relevant to whether or not the employees were
economically dependent upon the putative employer for a workplace
protection or benefit, such as field sanitation facilities. Therefore,
the provision of field sanitation facilities is an appropriate fact to
be considered in the joint employment analysis.
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\6\ 29 CFR 1928.110(b)(i)-(iii); (c).
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3. Florida Citrus Mutual
Florida Citrus Mutual (FCM) raises a number of issues (some of
which will be addressed more fully in the analysis of the NCAE comments
below) that question both the legality of the proposed regulation and
the extent to which the NPRM factors reflect the proper considerations
in determining joint employment.
The question of legality hinges largely on the FCM contention that
the Department inappropriately relies on MSPA legislative history,
specifically the 1982 House Committee Report, to guide its
interpretation of ``employ'' and the definition of independent
contractor and joint employment. The Department disagrees. When
developing implementing regulations, the Department can and should be
guided by the Congressional purpose as expressed in the statutory
language and the legislative history. MSPA arose in the House Education
and Labor Committee, Subcommittee on Labor Standards. That Committee's
view of the purpose it was seeking to serve by incorporating the FLSA
definition of ``employ'' into MSPA provides essential guidance to the
Department in construing that term. The Department has an obligation to
consider this Congressional guidance in implementing legislation
through regulations. Therefore, the NPRM seeks to incorporate the
Congressional intent as well as the construction given to the critical
term by the courts over the last 50 years.
FCM's contention that the Committee Report does not reflect
Congressional intent is unfounded. Committee reports are one of the
most important sources of legislative history. As one court has
explained, where ``Congress does enact a statute, the committee reports
explaining it may have considerable significance in guiding
interpretation'' and may serve as an indication of ``expressed purposes
of the drafters of statutory language * * *'' 7 In the case of
MSPA, the Committee Report was particularly thorough and precise. It
included the text of the bill, described its contents and purposes, and
gave reasons for the Committee's recommendations including the
recommendation on ``employ'' and joint employment which was adopted by
Congress via enactment of the bill. The Committee's extensive treatment
of the joint employment issue evidences the importance of the principle
as a ``central foundation'' of the statute.
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\7\ American Hospital Ass'n v. NLRB, 899 F.2d 651, 657 (7th Cir.
1990), aff'd 499 U.S. 606 (1991).
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Further, this FCM argument regarding use of legislative history to
develop regulations ignores the other bases for this proposed
regulation. The Department did not rely solely on legislative history
but also looked to its own enforcement experience under MSPA and the
substantial amount of case law construing joint employment.
FCM also disagrees with the proposed rule's analytical framework
for considering questions of independent contractor and joint
employment status, both of which arise from the definition of
``employ''. FCM states that ``it is virtually impossible for unskilled
manual laborers, offering nothing more than two willing hands, to be an
independent contractor''; a view shared by the Department as to the
likely status of such workers. However, while FCM acknowledges that
unskilled farmworkers will be the employees of someone, FCM takes issue
with the proposed analytical framework for identifying the workers'
employer or joint employers in that the regulation would look to
factors beyond the terms of any contractual agreement between the
agricultural employer/association and the FLC. FCM's position is that
to the extent any other factors are relevant and appropriate for
consideration, only common law right to control should be considered.
FCM contends that relationships between an agricultural employer/
association and FLC fall into two categories. In the first, the FLC is
so controlled by the agricultural employer/association that ``* * * he
is a foreman/employee of the farmer * * *'' rather than an independent
contractor doing business with the farmer, and all the workers in the
crew are direct employees of the agricultural employer/association. The
Department agrees that an FLC could very well operate as an employee of
the agricultural employer/association, and his/her crew members would
also be direct employees of that employer. However, the Department
disagrees with the basis for FCM's assertion. Court cases on this issue
make it clear that it is not simply control but all the facts bearing
on economic dependence that determine the status of the FLC.8 The
agricultural employer/association's control of the FLC is probative but
not necessarily determinative of the FLC's employee/independent
contractor status. Acknowledgment must be given to the extensive case
law which evaluates economic dependence by looking beyond the control
factor to consider other factors such as those set out in the proposed
rule at 500.20(h)(4)(i)-(v).
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\8\ Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1327
(5th Cir. 1985); Castillo v. Givens, 704 F.2d 181, 192 (5th Cir.),
cert. denied, 464 U.S. 850 (1983); Fahs v. Tree Gold Co-op Growers
of Florida, Inc., 166 F.2d 40, 43 (5th Cir. 1948).
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The second category of relationship identified by FCM is one in
which it is determined that the FLC is an independent contractor and
not an employee of the agricultural employer/association; the FLC's
crew members are his/her employees. FCM asserts that in such
circumstances the two tests of joint employment on the part of the
agricultural employer/association should be the contractual agreement
[[Page 11737]]
between that party and the FLC, and the extent to which the
agricultural employer/association retains the contractual right to
control the workers. To the extent that it is appropriate to look
beyond the terms of any contractual agreement, FCM asserts that control
factors alone should govern the determination of joint employment by an
agricultural employer/association and an independent contractor FLC.
The Department disagrees with the contention that common law
control elements should be given undue weight in the joint employment
analysis. As established by the courts and the current MSPA regulation,
the test for joint employment under MSPA does not allow, much less
require, that the determination be made exclusively or primarily by
considering the description of control in any FLC contractual agreement
or the actual exercise of control over the agricultural workers. Such
unwarranted reliance on contractual labels and common law control was
one of the primary reasons why Congress incorporated the FLSA
definition of ``employ'' into MSPA.9
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\9\ House Comm. Rept. at 4552-53.
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The legislative history and case law are clear that ``it is the
economic reality, not contractual labels * * *'' that determines the
employment relationships under the Act.10 Further, Congress stated
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 or association may
be a joint employer of the harvest workers and jointly responsible for
the contractor's employees.''11 While a finding that there are
sufficient indicia of control to satisfy the common law test of an
employment relationship would most likely result in a similar
determination under MSPA/FLSA, a finding of common law control is not a
prerequisite to finding that a joint employment relationship
exists.12
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\10\ House Comm. Rept. at 4553; Real v. Driscoll Strawberry
Assoc. Inc., 603 F.2d 748, 755 (9th Cir. 1979), citing Rutherford
Food Corp. v. McComb, 331 U.S. 722, 729 (1947); Usery v. Pilgrim
Equip. Co., 527 F.2d 1308, 1315 (5th Cir.), cert. denied, 429 U.S.
826 (1976); Hodgson v. Griffin and Brand of McAllen Inc., 471 F.2d
235, 237-238 (5th Cir.), cert. denied, 414 U.S. 819 (1973).
\11\ House Comm. Rept. at 4553; Griffin and Brand at 237.
\12\ House Comm. Rept. at 4553; Hodgson v. Okada, 472 F.2d 965
(10th Cir. 1973); Zavala v. Harvey Farms, No. 94-225-M Civil
(D.N.M., February 1, 1996) (Joint employer found even though court
determined the FLC exercises the supervisory control).
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4. The National Council of Agricultural Employers
The National Council of Agricultural Employers (NCAE), a
Washington, D.C. based association representing growers and
agricultural organizations on agricultural labor and employment issues,
submitted extensive comments on the proposed regulation. NCAE is
strongly opposed to any change in the current regulatory definition of
joint employment. NCAE asserts that the Department is inappropriately
and unlawfully seeking to discourage the use of farm labor contractors
by establishing a strict liability standard for agricultural employers/
associations who use the services of FLCs; that the proposed rule is
without a factual or legal foundation; that the proposed rule violates
the Administrative Procedure Act because it is arbitrary and
capricious; that the proposed rule is not user-friendly; and that the
proposed rule ignores existing law. These issues are addressed below.
a. Strict Liability
NCAE contends that the proposed regulation effectively establishes
a strict liability test for joint employment. The motive ascribed to
the Department is that the Department is seeking to discourage
agricultural employers/associations from using FLCs, thereby driving
FLCs from the labor market, disrupting the agricultural labor supply,
and empowering unions to substitute for FLCs in providing labor to
employers. Further, the NCAE asserts that the alleged strict liability
standard would allow the Department and farmworker legal services
lawyers to reach into the deep pockets of agricultural employers/
associations when violations occur, without the need to produce
adequate evidence bearing on the joint employment determination.
Finally, NCAE asserts that creation of the alleged strict liability
through a regulatory change would be an illegitimate attempt to
establish a legal standard which Congress and the courts have been
unwilling to adopt. For the reasons stated below, the Department
disagrees with the contention that the NPRM creates a strict liability
standard.
The proposed definition of joint employment is a reiteration of
well-established legal principles developed by the courts and
explicitly endorsed by Congress when it enacted MSPA. Both the
analytical framework set out in the proposed regulation (economic
dependence) and the test used to examine economic dependence (the
analytical factors) were derived from the cases found in the
legislative history and other cases deciding joint employer issues both
before and since MSPA's enactment. The Department has very specifically
avoided creating ``strict liability'' through any regulatory test which
would operate based on a presumption that a joint employment
relationship exists. The current regulation as well as the proposed
regulation expressly states that the presence or absence of one or more
of the analytical factors is not dispositive. All the facts in each
particular case must be considered using the factors identified in the
regulation and any other relevant factors. The Department has not
proposed any result-oriented ``strict liability'' or presumption test
for determining either independent contractor or joint employment
status. Instead, the Department has proposed a flexible test for joint
employer which is consistent with the case law, the legislative
history, and the current regulation which (as explained in the NPRM) is
clarified and made more user-friendly by the proposed changes.
Some of the concerns expressed by NCAE may be attributable to the
statement in the current and proposed regulations that joint employment
relationships are ``common'' in agriculture. As Congress recognized
when it enacted MSPA, the joint employment doctrine is ``the central
foundation of this new statute; it is the indivisible hinge between
certain important duties imposed for the protection of migrant and
seasonal workers and those liable for any breach of those duties.''
13 Citing favorably the U.S. Supreme Court's characterization of
``employ'' under FLSA in United States v. Rosenwasser, 323 U.S. 360
(1945), the Committee stated that ``a broader or more comprehensive
coverage of employees within the stated concept would be difficult to
frame.'' 14 However, the recognition that the definition of
``employ'' (of which joint employment is one aspect) is very broad
under MSPA does not lead to the presumption that joint employment is
always present. The proposed rule does not create a strict liability
standard that mandates the finding of joint employment in every
instance in which an agricultural employer/association retains the
services of a FLC. As the Department and the courts have recognized in
the current definition of ``joint employment'' under MSPA, ``* * *
joint employment relationships are common in agriculture. * *
*'',15 but that observation does not require or
[[Page 11738]]
inevitably lead to the creation of a strict liability standard or
presumption.
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\13\ House Comm. Rept. at 4552.
\14\ Ibid.
\15\ 29 CFR 500.20(h)(4)(ii); Aimable v. Long & Scott Farms, 20
F.3d 434, 438 (11th Cir.), cert. denied, 115 S.Ct. 351 (1994).
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The NCAE assertion that the proposed rule creates strict liability
is misplaced for another reason. The structure and language of the
proposed rule disavow any such presumption by expressly requiring an
examination of all the facts of each case using a multifactor
analytical framework to resolve the ultimate question of economic
dependence, which NCAE concedes is the relevant inquiry. While the
proposed rule sets out certain factors that are probative of the joint
employment relationship, the proposed rule makes it abundantly clear
that the ultimate test is ``* * * whether the worker is so economically
dependent upon the agricultural employer/association as to be
considered its employee. * * *'' NPRM at 500.20(h)(5)(iii). The factors
are merely tools to be used to answer the ultimate question of economic
dependence and are neither to be used as a checklist nor as an
exhaustive list of relevant factors.16
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\16\ See Antenor v. D & S Farms, 88 F.3d 925, 932 (11th Cir.
1996).
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Each potential joint employment situation must be examined on its
peculiar or special facts. The legislative history is clear that there
are a broad range of factual situations, and that each must be assessed
based on its own distinct circumstances.17 In the proposed rule,
the Department more clearly, completely, and accurately sets out the
appropriate method for analyzing these circumstances.
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\17\ House Comm. Rept. at 4553.
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There is no presumption or automatic joint employment. There are
circumstances which do not constitute joint employment. Some of the
factors in the proposed rule are frequently present in the typical
agricultural situation and, therefore, might lead to a determination of
employment or joint employment status on the part of the agricultural
employer/association. But such a determination must be made on all the
facts in a particular case. Despite NCAE's assertion, the proposed rule
does not compel a determination that joint employment exists whenever a
farm labor contractor or other service provider is utilized.
For example, in some crops, a grower may sell his/her entire crop
to a harvesting company, which becomes responsible for harvesting and
transporting the crop to storage or market; or a grower may turn his/
her entire harvesting operation over to a farm labor contractor, who
makes all the meaningful decisions regarding the harvesting of the
crops and provides his/her own materials and equipment needed in the
harvest, such as with custom combiners who harvest grain crops or other
custom harvesting operations common in many agricultural commodities.
Another example is where an agricultural employer/association
secures the services of a FLC and sets out ultimate performance
standards for the job, but then has no right to control or further
involvement in the work or the employment, all of which are in the
FLC's hands. The FLC and his/her employees are free to schedule work
under any other contracts. The FLC provides all the equipment, tools
and resources necessary to complete the job for which his/her services
were retained and to manage all aspects of the workers' employment. The
FLC has the financial and managerial ability to conduct his/her
business without the involvement or assistance of the agricultural
employer/association and undertakes all the responsibilities commonly
performed by an employer. This and similar arrangements are not
uncommon in agriculture. In such situations, an application of the
economic dependence analysis is unlikely to result in a determination
that the grower is an employer or joint employer under the MSPA.
In both of the above examples, it is quite common for the agreement
between the agricultural employer/association and the farm labor
contractor to explicitly state which party has responsibility for
meeting certain obligations. The mere fact that the agricultural
employer/association enters into an agreement making the farm labor
contractor exclusively responsible for functions and activities that
are commonly performed by employers--such as setting wage rates, paying
wages, supervising, directing and controlling the workers, providing
worker's compensation--does not indicate that the agricultural
employer/association may be a joint employer. On the other hand, merely
so providing in the contract is not controlling if the agricultural
employer/association in fact retains the power to, or actually
performs, such functions. As the legislative history and the case law
make abundantly clear, it is the economic reality of the relationship,
not contractual labels, that determine joint employment. In order to
allay any confusion that may exist and to clarify the effect of this
regulation, language has been added to the regulation to reiterate that
this regulation does not create strict or per se liability and that no
single factor or set of factors is determinative of joint employment.
As has been stated repeatedly, joint employment can only be determined
by an examination of all the facts in a particular case.
NCAE asserts that the effect of the proposed rule will be the
elimination of the use of FLCs and consequent disruption in the
agricultural labor market. This assertion fails to recognize that the
issue of joint employment under MSPA does not govern whether
agricultural employers/associations will have access to the services
provided by FLCs. No FLC will be precluded by anything in the proposed
regulation from pursuing his/her business. Even where the agricultural
employer/association is determined to be the employer or a joint
employer for purposes of MSPA, the employer/association may still use
the FLC's services for all the tasks which FLCs may perform under
MSPA--recruiting, soliciting, hiring, employing, furnishing, or
transporting any migrant or seasonal agricultural worker. The sole
effect of a joint employment determination is, where appropriate, to
make an agricultural employer/association jointly responsible in the
event the FLC does not perform the employer functions in a lawful
manner.
The American Farm Bureau Federation--a broad-based organization
similar to NCAE, which represents the business and economic interests
of more than 4 million agricultural families--has addressed many of the
same concerns raised by the NCAE comments but without predicting the
same dire consequences for agricultural employers/associations who
accept responsibility for FLCs' actions. In its Farm Bureau Grower's
Handbook: A Compliance Guideline To Federal Agricultural Labor Laws,
April, 1991, the Farm Bureau acknowledged that applying the economic
dependence analysis to the typical agricultural circumstance will ``* *
* probably be enough for him [the grower] to be a joint employer with
the labor contractor. * * *'' In light of this potential outcome, the
Farm Bureau suggested two alternative courses of action for its
members:
``A grower has two choices. First, you may try to distance
yourself from your farm labor contractor so that you will not be
found to be a joint employer if a lawsuit is brought against him.
Second, you may accept that the way in which you want your operation
to work does not allow you to avoid being a joint employer, and
decide to plan ahead to avoid legal liability. As for the first
choice, you should be aware that the trend of court decisions,
especially where workers covered by [MSPA] are concerned, is to find
that the
[[Page 11739]]
growers are joint employers. Generally speaking, this option is
available only where the workers are skilled and where the grower
takes a hands-off approach to supervising the work and the
employees. * * * On the other hand, planning ahead to take
responsibility for complying with FLSA and [MSPA] does not need to
be an unreasonable burden. Several of the steps that are required
may be taken by either the grower or the contractor. * * * A plan to
take all necessary steps to comply with FLSA and [MSPA] is a better
defense against a lawsuit than trying to avoid joint employment.''
Id. at 49-50.
The Farm Bureau acknowledges that joint employment in the typical
agricultural context is common but not inevitable. As will be addressed
in greater detail below, the Farm Bureau also lists factors used in the
joint employment analysis that closely track those set out in the
proposed rule and which NCAE suggests are inappropriate.
b. Application of the Analytical Factors in the Proposed Rule
NCAE suggests that under the proposed rule a finding of ``any
control or authority on the part of the grower'' will result in a
finding of economic dependence and joint employment. NCAE construes the
proposed rule as requiring that joint employment be found where any of
the delineated factors are present. However, NCAE misconstrues (or
perhaps overlooks) the express language of the proposed rule which
states that the factors ``are analytical tools to be used in
determining the ultimate question of economic dependence. The factors
are not to be applied as a checklist. * * * No one factor is critical
to the analysis * * * Rather, how the factors are weighed depends upon
all the facts and circumstances.'' NPRM at 500.20(h)(5)(iv).
NCAE asserts that the analytical factors identified in the proposed
rule are distorted or inappropriate for various reasons. This
contention appears to overlook the fact that each of the proposed
rule's analytical factors is drawn from the case law regarding
``employ'' and joint employment, as discussed below.
The American Farm Bureau Federation's published guidance for its
members (1991 Handbook) expressly recognizes a list of analytical
factors bearing on the joint employment determination. While the Farm
Bureau's factors do not identically track the factors set out in the
proposed rule, they are notably similar and their recognition by the
Farm Bureau is at odds with NCAE's assertions about the propriety and
relevance of factors such as the skills of workers, relative
investment, and permanency and exclusivity of the work. The Farm
Bureau's Handbook lists the relevant factors for determining as joint
employment as follows:
Who owns the property where the work is done?
How much skill is needed to do the job?
Who has investment in land, equipment and facilities?
How permanent and exclusive is the job?
Who has the right to control the work?
Who supervises the work?
Who sets the rates of pay or methods of payment and
employment policies?
Who has the right to hire, fire, discipline, and otherwise
affect the workers' employment?
Who prepares the payroll and pays the workers?
The NCAE's comments also address individual factors set forth in
the proposed rule, as follows:
i. Control/Supervision
Among the factors set forth in the proposed rule, this factor tests
the putative employer's power (directly or indirectly, exercised or
unexercised) to control or supervise the workers or the work performed.
NCAE suggests that the only relevant consideration under the control
factor should be the extent to which the grower actually exercises
control and then only if the exercise of control is substantial. The
Department disagrees with such a narrow view of control in the
determination of joint employment.
Courts addressing this matter have held that it is not the actual
exercise of direct control of the work but rather the power or ability
to do so that is relevant to the joint employment inquiry. 18
Further, the courts have recognized that the exercise of control can be
accomplished directly or indirectly through others, such as by
conveying instructions through a FLC to the workers. 19
---------------------------------------------------------------------------
\18\ Beliz at 1329-30; Haywood v. Barnes, 109 F.R.D. 568, 589
(E.D.N.C. 1986). Contra Aimable, at 440-441.
\19\ Aimable at 441; Griffin and Brand at 238; Monville v.
Williams, 107 Lab. Cas. (CCH) P34,978, at 45,252-253 (D. Md. 1987).
---------------------------------------------------------------------------
As one court observed when considering the control factor, ``* * *
the right to control, not necessarily the actual exercise of that
control is important. The absence of the need to control should not be
confused with the absence of the right to control.'' 20 Where the
agricultural employer/association retains any right to control the
workers or the work, this would constitute control indicative of an
employment relationship. For instance, where the agricultural employer/
association retains the right to direct details of the work, this fact
is indicative of control and therefore relevant to the joint employment
analysis.
---------------------------------------------------------------------------
\20\ Haywood at 589; cited in Barrientos v. Taylor, 917 F. Supp.
375, 383 (E.D.N.C. 1996).
---------------------------------------------------------------------------
Even the Aimable decision cited by NCAE in support of its comments
to the proposed rule does not necessarily support NCAE's position.
Having observed that in this case the FLC ``* * * exercised absolute,
unfettered and sole control over [the workers] and their employment,''
the Aimable court simply never addressed any circumstance in which the
putative joint employer retained the right to control but did not
exercise it. Aimable at 440.
The Department does believe that the words ``exercised or
unexercised'' in the proposed regulation language are redundant,
inasmuch as the ``power'' to control, direct, or supervise necessarily
implies the concept of unexercised control. Therefore, to avoid
confusion or misunderstanding and to bring greater clarity to the
regulation, the words ``exercised or unexercised'' are not included in
the Final Rule.
The courts have determined that the requisite control of the work
may be exercised directly or indirectly through others. 21
Indirect control or supervision may be accomplished through
instructions delivered to the FLC to be communicated to the workers. As
one court said, ``The fact that the defendant often effected this
supervision by speaking to the crew leaders, who in turn spoke to the
farmworkers, rather than speaking directly to the plaintiffs, does not
negate the obviously extensive degree of on-the-job supervision that
existed. Reality can not be so easily masked by transparent attempts to
cover over the truth with a deceptive label.'' 22
---------------------------------------------------------------------------
\21\ Griffin & Brand at 237; Barrientos at 382; Monville at
44,253; Leach v. Johnston, 812 F. Supp. 1198, 1207 (M.D. Fla. 1992);
Antunez v. G & C Farms, Inc., 126 Lab. Cas. (CCH) P33,015, at p.
46,174 (D.N.M. 1993).
\22\ Haywood at 589 citing Griffin & Brand at 238. See also
Aimable at 441 (''It is well-settled that supervision is present
whether orders are communicated directly to the laborer or
indirectly through the contractor.''); Beliz at 1328; Castillo at
189 n.17, 191-92.
---------------------------------------------------------------------------
It should be noted that indirect control sufficient to indicate the
existence of an employment relationship between a grower and a FLC's
crewmembers would not be established solely by contractual terms
through which the grower's ultimate standards or requirements for the
FLC's performance are defined (e.g., the
[[Page 11740]]
grower's specification of the size or ripeness of the produce to be
harvested, or of the date for the FLC's completion of a job). Such
stated performance standards or objectives--which are common in
contracts for services in the agricultural industry and in other
contexts--would not, in themselves, constitute indirect control of the
work by the person for whose benefit the services are to be performed
(e.g., the grower). However, the greater a grower's involvement in the
assurance and verification that the FLC is meeting or will meet the
contract's ultimate performance requirements, the greater the
likelihood that the grower would demonstrate sufficient indirect
control to indicate an employment relationship with the FLC's
crewmembers. Where the grower not only specifies in the contract the
size or ripeness of the produce to be harvested, but also appears in
the field to check on the details of the work and communicates to the
FLC any deficiencies observed, the circumstances must be closely
examined to determine if the grower is demonstrating sufficient
indirect control of the workers to indicate there may be an employment
relationship with them. The agricultural employer/association may
certainly take action during or after the conclusion of the work to
confirm satisfaction of the contract's ultimate performance standards
(including appearing in the field and communicating with the FLC about
general observations concerning performance of the contract standards,
such as ripeness or size of the produce harvested) without this action
alone being considered an indicium of joint employment. The critical
question to be considered is not whether the agricultural employer/
association was in the field or communicated with the FLC, but rather
what that presence in the field and those communications indicate about
the nature and degree of the agricultural employer/association's
control over the work or the employment. To avoid any possible
confusion in this regard, Factor (A) has been amended to provide that a
reasonable degree of contract performance oversight and coordination
with third parties such as packing houses and processors is
permissible.
ii. Power to Hire, Fire, Modify Employment Conditions or Determine Pay
Rates or Methods of Payment
As with the control factor, NCAE argues that it should be only the
actual exercise, not the power to effect, these activities that should
be considered. NCAE recognizes that these important employer functions
are significant in the determination of joint employment. A putative
employer's direct or indirect exercise of the power to hire, fire or
modify employment conditions, set pay rates or method of payment is
obviously relevant to employer status, as courts have stated. 23
For example, a putative employer may expressly agree on a rate of pay
for the workers in his/her contract with an FLC 24 or may
effectively determine the workers' compensation rates through the
amount of the payments to the FLC. 25
---------------------------------------------------------------------------
\23\ Beliz at 1328; Castillo at 192; Griffin & Brand at 237-38;
Antunez at p 46,173; Haywood at 587.
\24\ Beliz at 1328; Griffin & Brand at 238; Alviso-Medrano v.
Harloff, 868 F. Supp. 1367, 1373 (M.D. Fla. 1994); Haywood at 590-
91; Monville at 45,253.
\25\ Beliz at 1328; Castillo at 192; Alviso-Medrano at 1373;
Monville at 45,253; Maldonado at 487.
---------------------------------------------------------------------------
Equally relevant is the putative employer's power or authority to
exercise these functions should it be in his/her best interest to do
so. Courts have recognized that agricultural employers retain the
ability to exercise significant control over the employment but may
never find the need to exercise that power. 26 The retention of
power is revealing of the economic dependence of the workers on the
putative employer just as is the actual exercise of power.
---------------------------------------------------------------------------
\26\ See, e.g., Beliz at 1322, 1328; Maldonado at 487.
---------------------------------------------------------------------------
The current regulation, which NCAE urges the Department to retain,
includes the same factor bearing on employment that NCAE asserts is
objectionable. 27 This factor is merely preserved in the amended
rule.
---------------------------------------------------------------------------
\27\ See 29 CFR 500.20(h)(4)(ii)(C) The Power to determine the
pay rates or the methods of payment of the workers; (D) The right,
directly or indirectly, to hire, fire, or modify the employment
conditions of the workers.
---------------------------------------------------------------------------
iii. Provision of Housing, Transportation, Tools and Equipment, or
Other Materials Required for the Job
NCAE asserts that this factor should not be considered in a joint
employment analysis. Many courts have recognized the appropriateness of
identifying the person or entity which provides the housing,
transportation, tools, equipment, machinery and other resources related
to the employment. 28 The Department--along with the courts--
considers this factor to be relevant.
---------------------------------------------------------------------------
\28\ Rutherford at 731; Antenor at 937-938 & n.15; Beliz at
1328; Castillo at 192; Barrientos at 383; Haywood at 587, 588-89;
Monville at 45,253. But see Aimable at 443.
---------------------------------------------------------------------------
It is the Department's view that this factor is sufficiently
similar to the consideration of employer-provided services or benefits
in factor (H) of the NPRM that the factors should be consolidated in
the Final Rule. A fuller discussion of the relevance of these facts is
found in part vii below, which deals with new combined factor (G) of
the Final Rule.
iv. Degree of Permanency of the Relationship
NCAE contends that this factor should not be considered because it
was rejected by the court in Aimable. However, the Department
recognizes that, despite Aimable, the great weight of the case law
supports consideration of the degree of permanency and exclusivity in
the relationship between the workers and the putative employer in the
context of the agricultural operation in question. 29 The duration
of that operation necessarily affects the duration or permanency of the
relationship. Where an FLC and the workers are engaged for the duration
of the operation and are obligated to work only for or be available to
the agricultural employer/association at his/her discretion during that
period, that information bears directly on the question of the workers'
economic dependence. Other courts have found this factor relevant and
the Department believes that duration of the relationship should be one
of the factors considered in determining joint employment.
---------------------------------------------------------------------------
\29\ Ricketts v. Vann, 32 F.3d F1, F4 (rth Cir. 1994);
Lauritzen, Secretary of Labor v. Beliz at 1328; Fahs at 44; Haywood
at 589; Donovan v. Gillmor, 535 F. Supp. 154, 162-63 (N.D. Ohio),
appeal dismissed, 708 F.2d 723 (6th Cir. 1982).
---------------------------------------------------------------------------
v. Unskilled Work
NCAE suggests that this factor is designed to predetermine a
finding of joint employment, apparently based on the assumption that
nearly all agricultural work involves repetitive, rote tasks requiring
little skill or training even though NCAE also acknowledges that many
agricultural jobs require considerable skill and experience. The
Department recognizes that the worker's skill--like each of the other
factors identified in the case law and this regulation--is only one of
several factors which are to be considered in making the ultimate
determination as to the worker's economic dependence. In almost all
cases, the courts have considered the worker's degree of skill to be a
relevant and probative factor in the determination of such dependence.
30 In common experience in the agricultural industry and other
contexts, there is a reasonable correlation between the worker's degree
of skill and the marketability and value of his/her services. In the
free market
[[Page 11741]]
place, an unskilled task which may easily be learned and performed by
almost any worker is a task for which many workers (both trained and
untrained) can realistically compete, and is also a task for which the
competing workers would not be able to demand or expect high wages. The
lower the worker's skill level, the lower the value and marketability
of his/her services, and the greater the likelihood of his/her economic
dependence on the person utilizing those services. Conversely, the
higher the worker's skill level, the greater the value and
marketability of his/her services in the market place and,
consequently, the lesser the likelihood that he/she would be
economically dependent on any particular person who utilizes his/her
services.
---------------------------------------------------------------------------
\30\ Ricketts at 74; Beliz at 1328; Castillo at 190; Real at
755; Antunez at 46,174; Fahs at 44. But cf. Aimable at 444.
---------------------------------------------------------------------------
The Department concludes that, in light of the great weight of the
case law, the factor of the worker's degree of skill is an appropriate
factor for consideration in the determination of economic dependence;
the regulation therefore identifies this factor as one of several to be
considered. 31
---------------------------------------------------------------------------
\31\ Ricketts at 74; Beliz at 1328; Castillo at 190; Real at
755; Antunez at 46,174; Fahs at 44. But cf. Aimable at 444.
---------------------------------------------------------------------------
vi. Activities of the Workers Integral to Overall Business Operation
and Work Performed on Premises Owned or Controlled by Putative Employer
NCAE asserts that these two factors are included in the proposed
rule to assure that the agricultural employer/association always will
be found to be a joint employer. NCAE cites no authority for rejecting
these as relevant factors for determining joint employment. In fact, no
case has rejected these factors and they are invariably included among
the factors considered by courts. 32
---------------------------------------------------------------------------
\32\ Rutherford Food at 726, 729-730; Aimable at 444; Griffin &
Brand at 237-238; Beliz at 1328; Castillo at 192; Fahs at 42-43.
---------------------------------------------------------------------------
This MSPA regulation is an embodiment and distillation of the case
law, which consistently demonstrates that many factors--including the
worker's performance of a function integral to the putative employer's
operation, and the location of the work on the putative employer's
premises--are relevant and probative factors in the determination of
the ultimate question of the worker's economic dependence. 33 The
exclusion of one or more of these factors would not only be an
unjustifiable distortion of the courts' decisions, but would also
result in an incomplete analysis of the economic realities upon which
the ultimate issue of an employment relationship is based.
---------------------------------------------------------------------------
\33\ Rutherford Food at 726, 729-730; Aimable at 444; Griffin &
Brand at 237-238; Beliz at 1328; Castillo at 192; Fahs at 42-43.
---------------------------------------------------------------------------
In the agricultural industry, as in other parts of the free market
place, there is a logical and appropriate correlation between the
``centrality'' of a function in a business operation and the certainty
of the business' performance of that function through the use of
whatever resources or methods are necessary, including the use of
labor. In other words, where a function is a central or core part of
the business (i.e., important enough to be ``integral'' to the
business; often performed on the business' premises), common experience
shows that that business would be virtually certain to assure that the
function is performed, and would obtain the services of whatever
workers are needed for that function. The workers so engaged can
reasonably anticipate that the work will be available for so long as
the function in question must be performed. The Eleventh Circuit,
recognizing the importance of the putative employer's providing the
place where the work is performed, stated in Antenor: ``[t]his element
is probative of joint-employment status for the obvious reason that
without the land, the workers might not have work, and because the
business that owns or controls the worksite will likely be able to
prevent labor law violations, even if it delegates hiring and
supervisory responsibilities to labor contractors.'' 88 F.3d at 936-
937. The court applied a similar rationale in holding that ``a worker
who performs a routine task that is a normal and integral phase of the
grower's production is likely to be dependent on the grower's overall
production process.'' The workers' reliance upon a particular business
as a source or place of work (and, consequently, a source of income in
the form of wages for services) can appropriately be considered in the
determination of an employment relationship.
Conversely, where the work is not performed on the putative
employer's premises or is not integral to the putative employer's
business operation, these facts would indicate that the existence of a
joint employment relationship is somewhat less likely.
After carefully reviewing the case law and considering the NCAE
comment, the Department has concluded that the analysis of the workers'
economic dependency on the putative employer necessarily includes the
consideration of these two factors bearing on the ``centrality'' of the
function in the putative employer's operation. However, the Department
reiterates that neither of these factors (or any other factor) is
controlling in the analysis.
vii. Putative Employer Provides Services, Materials or Functions
Commonly Performed by an Employer
As stated in the discussion under part iii above, factor (C) of the
NPRM has been combined with factor (H) of the NPRM to create a new
factor (G) in the Final Rule because the substance of the two NPRM
factors is similar. Both NPRM factors focused on services, tools,
equipment, and materials which are commonly provided or performed by
employers. Factor (C) dealt with transportation and housing, which are
common indices of employment for transient workers or those who have no
other means of transportation to work. Factor (H) dealt with services
and benefits such as providing workers' compensation insurance and
handling payroll, which are commonly performed by employers.
In addition to the issues raised by the American Pulpwood
Association and others, discussed above, NCAE suggests that
consideration of this factor is inappropriate in that a putative
employer may take such actions or provide materials or services because
he/she handle them better or more economically than can the FLC. The
Department recognizes that an agricultural employer/association may be
more skilled, efficient, or better capitalized than the FLC and that
this may be a reason for performance of various ``employer'' functions.
However, the Department does not consider efficiency, motive, or
capitalization to be a reason to negate the relevance of this factor in
assessing joint employment. The courts have considered these facts to
be relevant and probative in the joint employment analysis.
Where a putative employer provides materials or services, or
undertakes functions normally performed by an employer (such as
providing workers' compensation, paying FICA taxes, transporting or
housing workers, providing the tools and equipment necessary to the
work), such behavior indicates that it is in his/her interest to
perform such functions that are commonly performed by employers rather
than rely on the FLC. 34 Further, workers who use the services,
materials or functions are in a very tangible way economically
dependent on the entity
[[Page 11742]]
performing these functions. 35 Thus, the performance of these
``employer'' functions by a putative employer is both an objective
manifestation of employer status and strong evidence of the workers'
economic dependence upon him/her.
---------------------------------------------------------------------------
\34\ Antenor at 937; Griffin & Brand at 237; Fahs at 42; Beliz
at 1328.
\35\ Antenor at 936 (``[T]he farmworkers were dependent on the
growers to obtain financial compensation for job-related injuries *
* * They relied on [the growers] to see that the social security
payments were made as well.')
---------------------------------------------------------------------------
The Final Rule contains some modifications made in response to
these commenter's concerns. The word ``normally'' in the NPRM has been
changed to ``commonly'' as a more accurate and precise word in this
context. Further, the NPRM has been amended to consider the amount of
the investment in tools and equipment when considering these items in
the joint employment analysis.
The Department recognizes that ownership of housing is not
determinative. To the extent that an agricultural employer/association
relinquishes all control of housing it owns to a third party, the mere
ownership of the housing by the agricultural employer/association would
not in itself be a consideration in the joint employment analysis.
The Department also recognizes that benefits, services or functions
performed by an agricultural employer/association may directly benefit
the workers, and that some persons might argue that these matters
should not be considered in the joint employment analysis to avert the
unintended and undesirable consequence that agricultural employers/
associations would be dissuaded from providing these benefits. While
workers may be benefited if an agricultural employer/association
provides workers' compensation, withholds and pays employment taxes, or
provides housing or transportation, the benefit realized by the workers
does not negate, but rather reinforces the relevance of the provision
of these services in determining the economic dependence of the
workers. As set out above, the courts have held these facts to be
probative of joint employment.
Nonetheless, it is not the Department's intention nor desire to
create unnecessary disincentives for agricultural employers/
associations to provide employment related benefits to agricultural
workers or more closely oversee farm labor contractor activities to
ensure compliance with legal obligations. Therefore, the MSPA
regulation on the assessment of civil money penalties, 29 CFR 500.143
is amended to include as an example of ``good faith efforts to comply
with the Act'' an agricultural employer/association providing benefits
to workers or taking reasonable measures to ensure FLC compliance with
legal obligations. These reasonable measures will be considered by the
Department as a mitigating factor in assessing any civil money
penalties resulting from violations which arise from the joint
employment relationship.
The Department further recognizes that an agricultural employer/
association may be harmed by an FLC who violates his/her contract with
the agricultural employer/association for the provision of labor and,
in so doing, fails to meet an employment obligation to the workers. If
an agricultural employer/association is found to be a joint employer,
and therefore jointly liable with the FLC for employment obligations to
the workers (e.g., payment of wages), the agricultural employer/
association would be required to ``make good'' on such obligations
where the FLC failed to do so. The joint and several liability inherent
in the concept of joint employment requires this result. However,
nothing in the case law on joint employment or in this MSPA regulation
should be construed as in any way prejudicing any rights the
agricultural employer/association may have against the FLC to recover
for damages resulting from the FLC's breach of the contract to provide
labor to the agricultural employer/association. Thus, if the FLC in
that contract agreed to pay the wages of the workers but failed to do
so, the agricultural employer/association found to be a joint employer
may well have legal recourse against the FLC for any money the
agricultural employer/association is required to pay to the workers.
Some employer commenters assert that certain activities are
undertaken by the agricultural employer/association not because of an
employment relationship with the workers or because it can handle the
activity more efficiently or economically than the FLC, but because the
agricultural employer/association is obligated under some other law to
engage in or refrain from engaging in certain activity. One example is
the landowner's obligation under Environmental Protection Agency (EPA)
regulations to prevent workers from reentering fields that were
recently sprayed with pesticides. The Department takes the view that
where an action or inaction is taken under compulsion of a legal
requirement which is unrelated to an employment relationship, such
action or inaction is not to be considered in the determination of
whether an employment relationship exists for purposes of MSPA. Thus,
while a grower's action in barring workers from a particular field at a
particular time might be viewed as an exercise of the grower's control
over the workers' hours and places of work (indicative of an employment
relationship), the Department would not take this activity into account
in the employment relationship analysis where the grower's action is
only that required to fulfill his/her legal obligations under EPA
requirements based on his/her status as a landowner and not on any
status as an employer.
c. Administrative Procedure Act
NCAE and other commenters assert that the Department has failed to
demonstrate a compelling rationale for the proposed rule, i.e., that
the Department presented no ``data'' to support the proposal and,
therefore, the rule is arbitrary and capricious. The proposed
regulation is intended by the Department to clarify the current
regulation, to provide more complete and accurate information to
affected parties (farm labor contractors, agricultural employers/
associations, and agricultural workers), and to make the regulation
more useful to the public. NCAE asserts that the rationale is
insufficient because the proposed regulation is longer rather than
shorter than the current regulation and because, in NCAE's opinion, the
regulated community is not confused and, therefore, needs no
clarification. Further, these commenters suggest that the proposed rule
is fatally flawed because in their opinion courts will not grant
deference to the new rule because it is at odds with the current rule
(promulgated shortly after MSPA's enactment) and with the Aimable
decision. The Department has considered these concerns and believes
them to be without foundation.
The current regulation is not being repudiated by the proposed
rule. Rather, the substance of the current regulation is being
reorganized and restated for purposes of clarity, and additional
guidance is being offered to the regulated community. In the 13 years
since the enactment of MSPA, it has become apparent that the regulation
needs to be updated to reflect the Department's enforcement experience
and a substantial body of court decisions construing joint employment.
Enforcement experience and judicial decisions have highlighted the need
for clarification and elaboration of the proper analysis of joint
employment.
Since the current regulation was promulgated in 1983, it has become
[[Page 11743]]
clear to the Department that the regulation does not offer complete
guidance on joint employment and may lead to misunderstanding and
confusion. The regulation has been misconstrued in as much as the five
factors delineated in 500.20(h)(4)(ii)(A)-(E) have sometimes been
viewed as an exhaustive list of factors that the Department believes
are probative of joint employment. This has never been the position of
the Department, as shown by the express qualification in the existing
regulation, which states that the determination of joint employment is
not limited to the regulation's list of factors. 29 CFR
500.20(h)(4)(ii). However, some of the regulated community and some
courts have taken the position that these are `` `the five regulatory
factors' '' (emphasis added), treating them as an exclusive or
exhaustive list. Aimable at 439.
The five factors identified in the current regulation continue to
be an essential part of the consideration of joint employment. The
proposed rule is intended to place them in the proper context as part
of the economic dependence analysis. The five factors, consolidated
into two, apply within the broader context of the economic dependence
analysis and the more complete list of factors found relevant by the
courts and by the Department in conducting this analysis.
The proposed regulation is thus a more complete and accurate
description of the appropriate joint employment analysis than is the
current regulation. The proposed rule is intended to give better
guidance to the regulated community about the purposes to be served by
the MSPA joint employment principles and provide additional guidance
about the ultimate question to be resolved in both the independent
contractor and joint employer analysis--i.e., economic dependence. The
Department has set out a nonexclusive list of factors which it believes
will help provide the proper framework for deciding whether or not a
joint employment relationship (or independent contractor status)
exists; the proposed rule preserves the current rule's express notice
that factors in addition to those identified in the regulation may be
appropriate for consideration. Through the proposed rule, the regulated
community is being provided with more complete guidance, the courts
will have the benefit of the Department's complete views on these
questions, and the Department's enforcement of MSPA will be made more
efficient and effective.
The need for clarification has become apparent to the Department.
Some recent court decisions--such as Aimable--have applied the current
regulation as a checklist, or as a rigid formula in which factors
simply are entered in two columns with little analysis beyond a
comparison of the totals at the bottom of the columns ``for'' and
``against'' joint employment. The most recent case to consider the
joint employment in agriculture issue 36 has instructed that this
analytical method is not what was intended by the courts in the seminal
cases 37 or by Congress in its express adoption of the FLSA's
broad concepts of ``employ'' and joint employment. The proposed rule is
intended to assist in focusing on and applying the flexible multifactor
analysis which is required.
---------------------------------------------------------------------------
\36\ Antenor, supra.
\37\ Rutherford Food at 730; Lauritzen at 1538; Pilgrim
Equipment at 1311.
---------------------------------------------------------------------------
Further, the Department's enforcement experience indicates a need
to better articulate and apply Congress's intentions for MSPA joint
employment. Studies have shown that the use of farm labor contractors
is increasing, thereby exacerbating the harmful effects which FLCs who
operate in violation of the laws have in this labor market. 38
These studies have shown that in comparison with growers, farm labor
contractors pay lower wages and provide fewer benefits. 39 To the
extent that farmworkers, who are entitled to the protections of MSPA,
are denied their rights because of misunderstanding of or incorrect
application of joint employment principles under the current
regulation, it is the Department's belief that the proposed regulation
will enable more agricultural employers/associations to understand and
fulfill their obligations if, as the American Farm Bureau Federation's
Grower Handbook says, they will ``accept that the way you want your
operation to work does not allow you to avoid being a joint employer.''
---------------------------------------------------------------------------
\38\ ``U.S. Farmworkers in the Post-IRCA Period: Based on Data
from the National Agricultural Workers Survey,'' Office of the
Assistant Secretary for Policy, March, 1993, at 16; ``The Report of
the Commission on Agricultural Workers'', Commission on Agricultural
Workers, November, 1992, at xxvii.(``In recent years FLCs
increasingly have filled the role of matching seasonal workers with
jobs. * * * Workers employed by FLCs generally receive lower wages
and are employed under working conditions inferior to those offered
to farmworkers hired by * * * agricultural employers.'').
\39\ Ibid.
---------------------------------------------------------------------------
5. AFL-CIO Comment
The AFL-CIO commented in support of the proposed rule as being
fully consistent with the statutory language, its legislative history
and its intended purposes. Further, the AFL-CIO expresses the view that
the proposed rule is likely to better inform the regulated community
about its obligations under the Act and thereby promote greater
compliance among employers, thus reducing government enforcement
expense.
The AFL-CIO found support for its views in the definition of
``employ'' under the FLSA and the Supreme Court's observation that ``a
broader or more comprehensive coverage of employee within the stated
categories would be difficult to frame.'' 40 The AFL-CIO asserts
that as a result of the broad coverage under ``employ,'' it has long
been settled that the traditional common law ``control'' tests and
principles do not solely determine whether or not a worker is an
independent contractor or employee, or whether or not he/she is
employed by one or more employers.
---------------------------------------------------------------------------
\40\ U.S. v. Rosenwasser, 323 U.S. 360, 362 (1945).
---------------------------------------------------------------------------
The AFL-CIO further emphasizes that Congress intended to capture
the broad scope of the FLSA coverage when it enacted MSPA. The AFL-CIO
cites the legislative history which shows that joint employment was
characterized as the ``central foundation'' of the Act and should not
be decided by common law principles.
The AFL-CIO agrees with the courts and the Department that the
proper analysis in determining employment status is economic dependency
based on consideration of the totality of the circumstances, not a
mechanically applied checklist of factors. Citing the language in the
Committee Report as evidence of the approach which Congress intended
(``* * * the absence of evidence on any one or more of the criteria
listed does not preclude a finding that an agricultural association or
agricultural employer was not a joint employer along with the crew
leader.'' 41), the AFL-CIO contends that the proposed rule
``reflects fairly the factors which Congress intended to aid in
evaluating whether workers are individual contractors or employees''
and who among the parties are employers. The AFL-CIO also suggests that
the Department consider including a brief statement explaining the
significance of the factors delineated in the NPRM as a way of bringing
greater clarity to the regulations.
---------------------------------------------------------------------------
\41\ House Comm. Rept. at 4553.
---------------------------------------------------------------------------
The AFL-CIO suggests that the regulation make clear that sufficient
control on the part of a putative employer is demonstrated if the
putative employer retains the right to establish general parameters
within which the work is to occur. They assert that a labor
[[Page 11744]]
intermediary may make all the implementing decisions within those broad
parameters but the person establishing those parameters retains
sufficient control to be deemed a joint employer. In their view,
sufficient control would be established if the putative employer
retains the right to dictate the ``place, pace and timing'' of the
harvest. A grower places his/her interests in the place, pace and
timing of the harvest to maximize profit given market price and other
factors in contrast with the FLC and piece-rate workers, whose economic
interests are to pick as much and as fast as possible to maximize
earnings. The grower thereby may make the worker (and the labor
contractor) subservient to--and dependent on--the grower's economic
goal of maximizing profit by delaying the harvest or by picking only
the best quality of fruit.
Because the proposed regulation is intended to address a broad
range of circumstances, the Department has concluded that any attempt
to delineate precisely how each factor is to be applied as suggested by
the AFL-CIO in this regard may well have the effect of unduly limiting
the factor's application to an inappropriately narrow range of factual
circumstances. As the proposed rule makes clear, the statement of the
factors is intended to offer guidance and not to be exhaustive, either
in the identification of relevant factors or in their application to
specific factual circumstances. In appropriate factual circumstances,
it may well be appropriate to conclude that the right to determine the
place, pace and timing of the work is sufficient to establish control
under the joint employer analysis.
6. Migrant Farmworker Justice Project
The Migrant Farmworker Justice Project (MFJP) submitted comments on
behalf of itself and 33 others, generally supporting the proposed rule.
Specifically, MFJP asserts that the proposed rule is necessary to
clarify the current regulation to more fully and completely conform to
case law cited in the MSPA legislative history and the judicial rulings
construing the Act. Further, MFJP contends that the current regulation,
particularly the listed factors, has excluded other relevant factors,
thereby misleading Wage and Hour compliance investigators and the
affected community about the obligations under the Act.
MFJP also contends that there is ample factual support for the
necessity to further refine the joint employment definition to serve
the legislative purpose in enacting MSPA in 1983. MFJP asserts that
MSPA was intended to shift responsibility to growers from FLCs for many
of the important protections under MSPA's predecessor statute, the Farm
Labor Contractor Registration Act (FLCRA). FLCRA did not include the
joint employer concept but rather placed responsibility on farm labor
contractors. MFJP asserts that the Department's incomplete definition
of joint employment in the current regulation has undermined that
essential Congressional purpose underlying the enactment of MSPA.
In support of this assertion, MFJP cites the legislative history of
MSPA in which Congress found that the FLCRA had ``failed to reverse the
historical pattern of abuse and exploitation of migrant and seasonal
farm workers'' and that ``a completely new approach must be advanced.''
42 As stated by an original co-sponsor of MSPA, this completely
new approach involved placing responsibility for compliance with
certain provisions on agricultural employers as well as FLCs:
---------------------------------------------------------------------------
\42\ House Comm. Rept. at 4549.
---------------------------------------------------------------------------
The [Act] corrects the key weakness of the FLCRA, which held only
the farm labor contractor responsible for such abuses and shielded the
employer unless he fell within the narrow definition of ``farm labor
contractor'' under that Act.
Remarks of Rep. Ford, 128 Cong. Rec. 10456 (daily ed. December 20,
1982).43
---------------------------------------------------------------------------
\43\ MFJP also cites Monville at 45,252 (''Indeed, the
elimination of this shielding effect of recruiter-contractors was
one consideration leading to the reformulation and broadening of the
definition of the term 'employ' when the [MSPA] was enacted to
replace the Farm Labor Contractor Registration Act of 1963.'')
---------------------------------------------------------------------------
In addition, MFJP contends that FLCs have proven to be difficult
both to regulate and, when found to be in violation, to effectively
bring to account. According to MFJP, many FLCs are so devoid of
resources that they are unable to satisfy civil money penalty
assessments or court judgments awarding monetary damages to aggrieved
farmworkers. Additionally, with such a transient population
(approximately 20% of the FLC population leaves the industry every year
and is replaced by new entrants),44 it is difficult to effectively
regulate labor standards if only FLCs are deemed responsible for
compliance.
---------------------------------------------------------------------------
\44\ This data is based on information from DOL registrations of
FLCs.
---------------------------------------------------------------------------
MFJP suggests that the proposed joint employment analysis needs
further clarification in order to reiterate that joint employment is
indicated when two or more employers share responsibility for all or
some of the factors set out in the proposed rule. According to MFJP,
such shared responsibility tends to indicate that the workers are
economically dependent on two employers, such as when a FLC provides
the clippers needed to harvest citrus and the agricultural employer/
association provides the equipment for hauling the fruit and the field
sanitation units (See proposed 500.20(h)(5)(iv)(C)). It also tends to
demonstrate that the putative employers are not completely
disassociated with respect to the employment of an employee. The
Department agrees with this point and thus the regulatory language at
500.20(h)(5) will be changed to clarify that shared responsibility is
an indication of joint employment. 45
---------------------------------------------------------------------------
\45\ See Antenor at 938; but see Aimable at 443 (significant
investment in equipment and facilities on the part of both the FLC
and the grower does not indicate that the workers are jointly
employed by both entities).
---------------------------------------------------------------------------
7. United Farm Workers, AFL-CIO, Texas Division
The United Farm Workers, AFL-CIO, Texas Division (UFW-Texas)
submitted comments on behalf of itself and 15 other organizations. The
UFW-Texas comments were generally supportive of the proposed rule and
many of its statements were consistent with and reflected in the AFL-
CIO and MFJP comments. However, UFW-Texas also suggests that the
factors set out in the proposed rule should be further explained and
reformulated to capture the full scope of the cases applying the
factors. For example, the proposed factor at Sec. 500.20(h)(4)(iii)
states in relevant part: ``[t]he putative employee's investment in
equipment or materials required for the task * * *''. UFW-Texas
suggests restating the factor in the following language (modifications
underlined): ``[t]he putative employee's investment in substantial
equipment, materials, and large capital expenditures as compared to
that of the putative employer.'' In the alternative, the UFW-Texas
proposes that the factors be amended to include citations to cases in
which the factors have been applied.
The Department believes the suggested changes are unnecessary. As
stated in the proposed rule, the regulation is intended to summarize
the factors applied by the courts and is not intended to be an
exhaustive statement of the relevant factors and their applicability in
every situation. Under this rule, it would still be necessary for
enforcement personnel and courts examining joint employment to refer to
the guidance offered by the courts that have applied the factors in
joint employment cases. Nothing the
[[Page 11745]]
Department has done in the proposed rule negates this additional level
of analysis.
8. United States Department of Agriculture
The United States Department of Agriculture (USDA) submitted a
number of comments concerning the NPRM. Many of USDA's comments were
similar to those submitted by agricultural interests and are fully
addressed above.
USDA made a number of observations regarding FLCs and their
relationships with agricultural employers/associations, and offered
several comments concerning the regulation in general. USDA suggested
that an amended MSPA joint employment regulation is unnecessary and
should not be issued. Further, USDA suggested that should a revised
joint employment regulation be deemed necessary or advisable, it should
be issued as a regulation applicable to all industries under the Fair
Labor Standards Act. After careful consideration, the Department
concluded that these USDA suggestions could not be accommodated, since
joint employment is already defined in the MSPA regulations and that
definition is in need of revision.
USDA also offered specific comments on the NPRM, all of which have
been fully considered by the Department. Some of the USDA suggestions
have been adopted while others have been rejected, as discussed below.
USDA, like the comments submitted by NCAE and discussed in detail
above, suggested that the NPRM test for economic dependence through an
analysis of the listed factors would create a strict liability standard
under MSPA and is therefore contrary to the case law and legislative
intent. To support this position, USDA offered hypothetical factual
patterns which it contended would illustrate strict liability in common
agricultural settings. USDA further commented that the Department
should focus its enforcement activities on the violating farm labor
contractors rather than upon agricultural employers/associations who
may or may not have any knowledge or control over contractors'
activities. USDA also suggested that the Department should delete the
NPRM factors concerning the unskilled nature of the work, work that is
integral to the overall business operation of the agricultural
employer/association, and work performed on the premises of the
agricultural employer/association because these factors are indicative
of an independent contractor relationship rather than joint employment.
The Department has determined--based on a careful review of the
legislative history and case law--that these concerns have been
appropriately taken into account, as discussed earlier in this preamble
with regard to other commenters. In addition, USDA contended that an
economic analysis should be completed pursuant to Executive Order
12866. For the reasons stated in the Executive Order section of this
preamble, the Department has concluded that such an analysis is not
required.
USDA offered a number of specific recommendations to amend or
clarify the NPRM that have been adopted in the Final Rule. The Rule
expressly states that the test for joint employment is not a strict
liability or per se rule. In the Preamble, examples have been included
of hypothetical factual situations involving agricultural employers/
associations and farm labor contractors in which joint employment is
unlikely to be found. The NPRM Factor (A)--concerning the power to
control, direct, or supervise the workers or the work--has been amended
to clearly state that a reasonable exercise of contract performance
oversight by the putative employer would not be sufficient to
constitute ``control'' for purposes of joint employment. The NPRM
Factor (I)--concerning ``other relevant factors''--has been deleted as
being unnecessary and redundant; the regulation's language preceding
the list of factors makes it clear that the factors are not an
exhaustive list of all relevant considerations in the joint employment
analysis. The MSPA regulation on the assessment of civil money
penalties (29 CFR 500.143(b)(4)) is being clarified through the
addition of a parenthetical illustrating that agricultural employers/
associations who take reasonable measures to gain farm labor contractor
compliance or who offer employment-related benefits to agricultural
worker will have these good faith activities considered as mitigating
factors in any penalty assessment resulting from a finding of joint
employment. The Preamble also explains that where agricultural
employers/associations undertake responsibilities solely as a result of
a legal obligation unrelated to an employment relationship, those
undertakings will not be considered in the joint employment analysis.
IV. Summary and Discussion of Final Rule
A. Joint Employment Standard Under MSPA
The Department is amending the MSPA regulation defining the
employment and joint employment relationship in agriculture. Having
reviewed this regulation in accordance with Executive Order 12866, the
Department recognized the need for a clearer and more complete
regulation. The Department announced its intention to update and
clarify this MSPA regulation in the regulatory agendas published in the
Federal Register (60 FR 23546 (May 8, 1995); 60 FR 59614 (November 28,
1995)).
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 legal
standards under MSPA and the Fair Labor Standards Act, which contain
the identical statutory standard.46 It is the Department's view
that the MSPA ``joint employment'' regulation will be strengthened by
focusing more closely on the ultimate test for employment and joint
employment as established by the federal courts, i.e., ``economic
dependence,'' and by further clarifying 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.
---------------------------------------------------------------------------
\46\ Compare: Antenor, supra, with Aimable, supra.
---------------------------------------------------------------------------
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.47 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(s) and the putative employer(s) to determine upon whom the
employee is economically dependent.48 The determination of
economic dependence
[[Page 11746]]
is based upon the ``economic reality'' 49 of all the circumstances
and not upon isolated factors or contractual labels.50 Since the
``economic reality'' test was first delineated by the Supreme Court in
Rutherford Food, the courts have consistently applied a multi-factor
analysis as a means of gauging whether the worker is economically
dependent on the putative employer; under this analysis, no single
factor is determinative.
---------------------------------------------------------------------------
\47\ See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326
(1992); Rutherford Food at 728-729 (1947); Lauritzen at 1534.
\48\ See Lauritzen at 1534, 1538; Beliz at 1327; Real at 754.
\49\ See Rutherford Food at 727, 729; Griffin & Brand at 237.
\50\ Rutherford Food at 727, 729; Griffin & Brand at 237.
---------------------------------------------------------------------------
The joint employment doctrine, which has long been recognized under
FLSA case law,51 is defined by the FLSA regulation to mean a
condition in which ``[a] single individual may stand in the relation of
an employee to two or more employers at the same time'', such a
determination depending upon ``all the facts in the particular case.''
(29 CFR 791.2(a)).
---------------------------------------------------------------------------
\51\ E.g., Falk v. Brennan, 414 U.S. 190, 195 (1973); Bonnette
v. California Health and Welfare Agency, 704 F.2d 1465, 1469 (9th
cir. 1983); Griffin & Brand at 237-238.
---------------------------------------------------------------------------
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.'' 52 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.'' 53 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.54 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.
---------------------------------------------------------------------------
\52\ House Comm. Rept. at 6-7.
\53\ 128 Cong. Rec. H26008 (Sept. 1982).
\54\ House Comm. Rept. at 7
---------------------------------------------------------------------------
The current MSPA regulation, promulgated in 1983, sets out a non-
exclusive list of factors which are appropriately 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 a 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 being
misinterpreted but is also being applied so as to frustrate the express
intention of Congress in enacting MSPA.
B. The Final 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 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
regulation also addresses the crucial, initial issue of whether a farm
labor contractor is a bona fide independent contractor or an employee
of an agricultural association/employer. Where an FLC is actually an
employee of the agricultural employer/association, any worker providing
services through the FLC is necessarily also an employee of the FLC's
employer.
The Final Rule more clearly enunciates the proper analysis 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 provides needed guidance
on ``control,'' clarifying that the appropriate inquiry is as to a
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 is 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.
C. Changes Made in the NPRM Regulatory Text
Section 500.20(h)(5) in the NPRM has been changed to clarify that
shared responsibility on the parts of putative employers is an
indication of joint employment.
Section 500.20(h)(5)(iv) in the NPRM has been changed to clarify
that this regulation is not intended to create a strict liability or
per se standard of joint employment liability.
Section 500.20(h)(5)(iv)(A) in the NPRM is changed to delete the
phrase ``and may be either exercised or unexercised.'' The phrase ``and
a reasonable degree of oversight of contract performance and
coordination with third parties'' has been added to this factor.
Section 500.20(h)(5)(iv)(C) in the NPRM has been deleted and its
contents have been incorporated into new factor (G).
Section 500.20(h)(5)(iv)(G) (factor (H) in the NPRM) has been
amended to change ``normally'' to ``commonly'' and ``maintaining'' to
``preparing and/or making.'' Factor (C) in the NPRM has been
incorporated in this factor along with the phrase ``taking into account
the amount of the investment.''
Section 500.20(h)(5)(iv)(I) in the NPRM has been eliminated.
Section 500.143(b)(4) of the current regulation (29 CFR
500.143(b)(4)) has been amended to add examples of good faith efforts
to comply with the Act by agricultural employers/associations.
V. Executive Order 12866/Section 202 of the Unfunded Mandates Reform
Act of 1995/Small Business Regulatory Enforcement Fairness Act 1995
The Final Rule is not ``economically significant'' within the
meaning of Executive Order 12866, is not a major rule within the
meaning of Section 804(2) of the Small Business Regulatory Enforcement
Fairness Act, and does not require a section 202 statement under the
Unfunded Mandates Reform Act of 1995. This rule simply amends the MSPA
regulations to clarify the concepts of employ, employer, employee, and
joint employment, which are already contained in the current
[[Page 11747]]
rule. The need for clarification of the current rule is clear, given
that the factors listed in the rule are less complete than those
applied by the courts and, therefore, require further explanation.
Although the Final Rule is simply a clarification of existing concepts,
the rule is designed to refocus the analysis of the employment and
joint employment doctrines. Therefore, this rule is being treated as a
``significant regulatory action'' within the meaning of section 3(f)(4)
of Executive Order 12866. However, no economic analysis is required
because the rule will not have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities. Furthermore, even if this rule were to
result in liability which does not already exist for growers in every
circumstance in which farm labor contractors are currently assessed
back wages or civil money penalties by the Department of Labor, the
Department estimates that the maximum resulting impact on growers would
be less than $4 million.
For purposes of the Unfunded Mandates Reform Act of 1995, as well
as E.O. 12866, this rule does not include any federal mandate that may
result in increased expenditures by either state, local and tribal
governments in the aggregate, or by the private sector.
VI. Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act (``RFA''), 5 U.S.C.
601-612 (1982), the Department, in its NPRM, certified that its
proposed rule would not have a significant economic impact on a
substantial number of small entities. NPRM at 14037. Similarly, this
Final Rule will not have a significant economic impact on a substantial
number of small entities.
The Final Rule contains language which is intended to clarify what
is meant by the terms employ, employer, employment, and joint
employment under MSPA. NCAE and other commenters contend that the
Department must conduct a ``final regulatory flexibility analysis'' to
be issued with the final rule because of their view that the rule
results in strict liability and, thus, imposes new burdens. As
addressed more fully above, the rule does not impose strict liability.
The rule simply clarifies existing guidance to bring it into line with
the legislative history of the MSPA, as well as the judicial rulings
which have construed its statutory terms and definitions. This
clarification will not, however, substantively change existing rights
or obligations or impose any new requirements, burdens or obligations
on entities that are covered by the regulation, including small
entities.
In view of the fact that the proposed rule will simply serve to
clarify a grower's obligation, not substantively expand or change that
obligation, the rule will not have a significant economic impact on a
substantial number of small entities. Therefore, no regulatory
flexibility analysis is required.
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
Administrative practice and procedure, Aliens, Housing, Insurance,
Intergovernmental relations, Investigations, Migrant labor,
Occupational safety and health, Reporting and recordkeeping
requirements, Wages.
Signed at Washington, D.C., on this 6th day of March, 1997.
John R. Fraser,
Acting Administrator, Wage and Hour Division.
For the reasons set forth above, 29 CFR part 500 is 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.
* * * * *
(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 a farm labor contractor engaged by an 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 Associates,
Inc., 603 F.2d 748 (9th Cir. 1979), Sec'y of Labor, U.S. Dept. of Labor
v. Lauritzen, 835 F.2d 1529 (7th Cir. 1987), cert. denied, 488 U.S. 898
(1988); Beliz v. McLeod, 765 F.2d 1317 (5th Cir. 1985), and Castillo v.
Givens, 704 F.2d 181 (5th Cir.), cert. denied, 464 U.S. 850 (1983). 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 farm labor contractor or worker is
an employee or an independent contractor, the ultimate question is the
economic reality of the relationship--whether there is economic
dependence upon the agricultural employer/association or farm labor
contractor, as appropriate. Lauritzen at 1538; Beliz at 1329; Castillo
at 192; Real at 756. 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/her 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 require
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
[[Page 11748]]
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. When
the putative employers share responsibility for activities set out in
the following factors or in other relevant facts, this is an indication
that the putative employers are not completely disassociated with
respect to the employment and that the agricultural worker may be
economically dependent on both persons:
(i) If it is determined that a 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.
(iv) The factors set forth in paragraphs (h)(5)(iv)(A) through (G)
of this section are analytical tools to be used in determining the
ultimate question of economic dependency. The consideration of each
factor, as well as the determination of the ultimate question of
economic dependency, is a qualitative rather than quantitative
analysis. The factors are not to be applied as a checklist. No one
factor will be dispositive of the ultimate question; nor must a
majority or particular combination of factors be found for an
employment relationship to exist. The analysis as to the existence of
an employment relationship is not a strict liability or per se
determination under which any agricultural employer/association would
be found to be an employer merely by retaining or benefiting from the
services of a farm labor contractor. The factors set forth in
paragraphs (h)(5)(iv)(A) through (G) of this section are illustrative
only and are not intended to be exhaustive; other factors may be
significant and, if so, should be considered, depending upon the
specific circumstances of the relationship among the parties. 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, taking into account the nature of the
work performed and a reasonable degree of contract performance
oversight and coordination with third parties);
(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) The degree of permanency and duration of the relationship of
the parties, in the context of the agricultural activity at issue;
(D) The extent to which the services rendered by the worker(s) are
repetitive, rote tasks requiring skills which are acquired with
relatively little training;
(E) Whether the activities performed by the worker(s) are an
integral part of the overall business operation of the agricultural
employer/association;
(F) Whether the work is performed on the agricultural employer/
association's premises, rather than on premises owned or controlled by
another business entity; and
(G) Whether the agricultural employer/association undertakes
responsibilities in relation to the worker(s) which are commonly
performed by employers, such as preparing and/or making payroll
records, preparing and/or issuing pay checks, paying FICA taxes,
providing workers' compensation insurance, providing field sanitation
facilities, housing or transportation, or providing tools and equipment
or materials required for the job (taking into account the amount of
the investment).
* * * * *
3. In Sec. 500.143, paragraph (b)(4) is revised to read as follows:
Sec. 500.143 Civil money penalty assessment.
* * * * *
(b) * * *
(4) Efforts made in good faith to comply with the Act (such as when
a joint employer agricultural employer/association provides employment-
related benefits which comply with applicable law to agricultural
workers, or takes reasonable measures to ensure farm labor contractor
compliance with legal obligations);
* * * * *
[FR Doc. 97-6036 Filed 3-11-97; 8:45 am]
BILLING CODE 4510-27-P