The Eleventh Circuit Court of Appeals, which has jurisdiction over Florida, recently ruled that DHL was not liable for overtime under the Fair Labor Standards Act (“FLSA”) for hours worked by independent drivers it had hired through a third-party contractor.  In the case, Layton v. DHL Express (USA), Inc., DHL Express (USA) Inc. contracted with a separate company, Sky Land Express, Inc., to provide DHL drivers to deliver packages in Alabama.  The issue was whether DHL was liable for overtime compensation to the contracted drivers as a “joint employer” under the FLSA.  The Court ruled that DHL was not the joint employer of drivers.

Under the FLSA, courts determine whether an entity is a joint employer based on the contracted workers’ economic dependence on the entity.  This is called the “economic realities test.”  The Eleventh Circuit for the first time applied the following 8 factors in determining that the drivers were not economically dependent on DHL:

APPLICATION TO DHL

DHL did not involve itself in how to accomplish the goals of delivering packages on time and serving customers DHL had a limited amount of monitoring at the warehouse but did not supervise the drivers while making deliveries, which took up the vast majority of workday Sky Land, and not DHL, had the power to establish drivers’ pay rates Sky Land, and not DHL, had the power to hire or fire drivers Sky Land, and not DHL, retained the obligation to compensate the drivers Although DHL owned the warehouses where packages were picked up, the drivers spent most of their time in vans owned by Sky Land delivering the packages While the drivers “performed a crucial task” for DHL, they performed most of their work away from DHL’s facilities and did not work side-by-side with other DHL employees Both DHL and Sky Land made significant investments.

FACTORS

 
  1. The nature and degree of control of the workers

 

 
  1. The degree of supervision, direct or indirect, of work

 

 
  1. The power to determine the pay rates or the methods of payment of the workers

 

 
  1. The right, directly or indirectly, to hire, fire, or modify employment conditions of the workers

 

 
  1. Preparation of payroll and the payment of wages

 

 
  1. Ownership of the facilities where worked occurred

 

 
  1. Performance of a speciality job integral to the business

 

 
  1. Investment in equipment and facilities.

 

 

Employers who hire through third-party contractors must review these 8 factors to determine if they may have a joint employment relationship with the contractor–supplied workers.