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Ling Nan Zheng v. Liberty Apparel Co. - 355 F.3d 61 (2d Cir. 2003)

Rule:

The four-factor Bonnette test, borrowed by the United States Court of Appeals for the Second Circuit from the United States Court of Appeals for the Ninth Circuit in Carter, is useful largely in cases involving claims of joint employment, because, when an entity exercises those four prerogatives--whether the entity (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records--that entity, in addition to any primary employer, must be considered a joint employer. The Superior Care factors, on the other hand, and particularly factors two and three--the workers' investment in the business, and the degree of skill and independent initiative required of workers--have been used primarily to distinguish independent contractors from employees, because, unlike the Carter factors, they do not bear directly on whether workers who are already employed by a primary employer are also employed by a second employer. Instead, they help courts determine if particular workers are independent of all employers. 

Facts:

Plaintiffs-Appellants are 26 non-English-speaking adult garment workers who worked in a factory at 103 Broadway in New York's Chinatown. They brought this action against both (1) their immediate employers, six contractors doing business at 103 Broadway ("Contractor Corporations") and their principals (collectively, "Contractor Defendants"), and (2) Liberty Apparel Company, Inc. ("Liberty") and its principals, Albert Nigri and Hagai Laniado (collectively, "Liberty Defendants"). Because the Contractor Defendants either could not be located or have ceased doing business, plaintiffs have voluntarily dismissed their claims against those defendants with prejudice. Accordingly, plaintiffs now seek damages only from the Liberty Defendants.

Plaintiffs, who were directly employed by the contractors, claimed that Liberty Defendants were their joint employers because they worked predominantly on Liberty’s garments, they performed a line-job that was integral to the production of Liberty’s product, and their work was frequently and directly supervised by Liberty Defendants' agents. Liberty Defendants responded that the contractors, who, among other things, hired and paid plaintiffs to assemble clothing for numerous manufacturers, were plaintiffs' sole employers.

Issue:

Did the district court err when, based exclusively on the four factors identified in Carter, it concluded, as a matter of law, that Liberty Defendants were not joint employers within the meaning of the FLSA or under state law?

Answer:

Yes

Conclusion:

The district court erred when, based exclusively on the four factors identified in Carter, it concluded, as a matter of law, that Liberty Defendants were not joint employers within the meaning of the FLSA or under state law. Under the broad language of 29 U.S.C.S. § 203(g), as interpreted in Rutherford, a district court must look beyond traditional agency principles before declaring that the entity is not an employer under the FLSA. The appellate court vacated the district court's judgment dismissing the FLSA claims and the New York state law claims and remanded with instructions to the district court to determine whether defendants should have been deemed to have been plaintiffs' joint employer. This determination was to be based on "the circumstances of the whole activity," viewed in light of "economic reality."

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