California: Joint Employer Liability Revisited

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All Employers with CA Employees

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September 10, 2021

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In Medina v. Equilon Enterprises, LLC, the California Court of Appeal applied the Martinez test, for wage and hour purposes, to determine joint employer status (not the Dynamex test which is specific to independent contractors). The Martinez test looks to the applicable wage order, which there consisted of three alternative standards: (1) to exercise control over wages, hours, or working conditions, directly or indirectly, or through an agent or any other person; (2) to “suffer or permit to work”; or (3) to engage. “’A proprietor who knows that persons are working in his or her business without having been formally hired, or while being paid less than the minimum wage, clearly suffers or permits that work by failing to prevent it, while having the power to do so.’”

There, the plaintiff was employed by an independent operator of a Shell-owned gas station, and he made a claim for unpaid wages against both his employer and Shell following termination. Because of “Shell’s near-complete control over the employer’s finances, day-to-day operations, facilities, and practices,” “Shell could have stopped plaintiff from working in their stations through a variety of means.” For example, Shell employees reportedly told the plaintiff they had the power to fire him or to have him fired, Shell had contractually-mandated control over the employer’s bank accounts, Shell was able to add or remove individual stations to and from operator clusters at any time and for any reason, and Shell unilaterally set reimbursements for labor costs while mandating hours of operation for their stations. Shell’s indirect control over the employer operator had the “practical effect of controlling plaintiff’s wages.”

Ultimately, the court stated that the facts showed that Shell both indirectly controlled plaintiff’s wages and working conditions and suffered or permitted plaintiff to work at Shell’s stations, either of which was enough to make Shell plaintiff’s joint employer.

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Review potential joint employer exposure with legal counsel.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.