[Federal Register Volume 61, Number 62 (Friday, March 29, 1996)]
[Proposed Rules]
[Pages 14035-14039]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7818]
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DEPARTMENT OF LABOR
Employment Standards Administration; Wage and Hour Division
29 CFR Part 500
RIN 1215-AA93
Migrant and Seasonal Agricultural Worker Protection Act
AGENCY: Wage and Hour Division, Employment Standards Administration,
Labor.
ACTION: Notice of proposed rulemaking, request for comments.
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SUMMARY: This document proposes regulations to amend the definition of
[[Page 14036]]
``employ'' under the Migrant and Seasonal Agricultural Worker
Protection Act (MSPA). Consistent with Executive Order 12866, which
concerns regulatory planning and review (see 58 Fed. Reg. 51735 (Oct.
4, 1993)), this document proposes to amend MSPA regulations to clarify
and make easier to understand the definition of ``independent
contractor'' and ``joint employment'' under MSPA, with the goal of
minimizing the potential for uncertainty and litigation arising from
such uncertainty and to better guide the Department's enforcement
activities.
DATES: Comments on the proposed rule are due on or before June 12,
1996.
ADDRESSES: Submit written comments to Maria Echaveste, Administrator,
Wage and Hour Division, Employment Standards Administration, U.S.
Department of Labor, Room S-3502, 200 Constitution Avenue, NW.,
Washington, DC 20210. Commenters who wish to receive notification of
receipt of comments are requested to include a self-addressed, stamped
post card or to submit them by certified mail, return receipt
requested. As a convenience to commenters, comments may be transmitted
by facsimile (``FAX'') machine to (202) 219-5122. This is not a toll-
free number. If transmitted by FAX and a hard copy is also submitted by
mail, please indicate on the hard copy that it is a duplicate copy of
the FAX transmission.
FOR FURTHER INFORMATION CONTACT: Michael Hancock, Office of Enforcement
Policy, Farm Labor Team, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, Room S-3510, 200 Constitution
Avenue, NW., Washington, DC 20210; telephone (202) 219-7605. This is
not a toll-free number. Copies of this NPRM in alternative formats may
be obtained by calling (202) 219-7605, (202) 219-4634 (TDD). The
alternative formats available are large print, electronic file on
computer disk and audio-tape.
SUPPLEMENTARY INFORMATION:
I. Paperwork Reduction Act of 1995
This proposed rule contains no reporting or recordkeeping
requirements subject to the Paperwork Reduction Act of 1995 (Pub. L.
104-13).
II. Background
The MSPA definition of ``joint employment,'' 29 CFR 500.20(h)(4),
is proposed to be amended to clarify and provide more accurate and
complete information to the regulated community, thereby making the
MSPA regulations more ``user-friendly.'' The proposed regulation
comports more fully with (1) the Fair Labor Standards Act (FLSA)
regulations at 29 CFR 791; (2) seminal court decisions regarding the
employment relationship; and (3) the MSPA legislative history.
The MSPA statutory definition of ``employ'', 29 U.S.C. 1803(3)(5),
from which the concept of ``joint employment'' is drawn, is the FLSA
statutory definition of ``employ'', 29 U.S.C. 203(g), incorporated by
reference. In keeping with the President's executive order directive to
Federal agencies to identify rules that could be clarified to provide
more complete and understandable guidance to the regulated community,
the Department proposes to amend the MSPA ``joint employment''
regulation. The Department has notified the public and the regulated
community of its intention, through the regulatory agenda and
regulatory planning process, to amend this regulation. See 60 Fed. Reg.
23546 (May 8, 1995) and 60 Fed. Reg. 59614 (Nov. 28, 1995).
III. Summary and Discussion
Joint Employment Standard Under MSPA
The Department proposes to amend the MSPA regulation defining the
employment and joint-employment relationship in agriculture. Having
reviewed this regulation in the normal course of DOL operations, the
Department recognizes the need for a clearer and more complete
regulation setting forth the applicable criteria, thereby making the
regulation more ``user-friendly.'' The purpose of the amendment is to
clarify the regulation and, thus, to avoid confusion and misapplication
of the standards to be considered in determining the existence of the
employment and joint-employment relationship. A further purpose is to
update the regulation to reflect more completely the Congressional
intent in the enactment of MSPA, the state of the law, and the
Department's understanding of the employment and joint employment
standard.
The Department has intended for some time to up-date and clarify
this MSPA regulation. The matter has been included in the DOL
regulatory agendas published in the Federal Register (60 FR 23546 (May
8, 1995); 60 FR 59614 (November 28, 1995)). The present proposed
rulemaking undertakes the previously announced revision of the
employment and joint employment definition.
The current MSPA ``joint employment'' regulation identifies
particular factors which should be considered in determining the
existence of such relationships in the agricultural context. This
Departmental guidance appears to be subject to some misunderstanding in
the regulated community and the courts with regard to the applicability
of the legal standards under MSPA and the Fair Labor Standards Act,
which contain the identical statutory standard.1 It is the
Department's view that the MSPA ``joint employment'' regulation should
be modified to focus more closely on the ultimate test for employment
and joint employment as established by the federal courts, i.e.,
``economic dependence,'' and to further clarify the multi-factor
analysis to be used to determine the existence of ``economic
dependence'' in the agricultural context. Such a clarified regulation
will ensure more consistent application of the FLSA principles of
employment and ``joint employment'' under MSPA, and will also ensure
the full implementation of the Congressional intent in adopting those
principles in MSPA.
\1\ Compare: Hodgson v. Griffin & Brand of McAllen, Inc., 471
F.2d 235 (5th Cir.), cert. denied, 414 U.S. 819 (1973), with Aimable
v. Long and Scott Farms, 20 F.3d 434 (11th Cir.), cert. denied, 115
S.Ct. 351 (1994).
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Legislative and Judicial Basis for ``Joint Employment''
The FLSA defines the term employ as meaning ``to suffer or permit
to work'' (29 U.S.C. 203(g)), and the courts have given an expansive
interpretation to the statutory definition of employ under the FLSA in
order to accomplish the remedial purposes of the Act.2 In
accordance with the FLSA's broad definitions and remedial purposes, the
traditional common law ``right to control'' test has been rejected in
interpreting the FLSA definition of employ. Instead, the test of an
employment relationship under the FLSA is ``economic dependence,''
which requires an examination of the relationships among the employee
and the putative employer(s) to determine upon whom the employee is
economically dependent.3 The determination of economic dependence
is based upon the ``economic reality'' of all the circumstances and not
upon isolated factors or contractual labels.4 Since the ``economic
reality'' test first delineated by the Supreme Court in Rutherford
Food, the courts have uniformly considered a number of factors, no one
of which is
[[Page 14037]]
determinative. Instead, the multi-factor analysis is a means of gauging
whether the worker is economically dependent on the business(es) for
which the worker is ``suffered or permitted to work'' and whether the
nature and degree of that dependence constitutes an employment
relationship within the intended protections of the FLSA.
\2\ See Rutherford Food Corp. v. McComb, 331 U.S. 722, 729
(1947).
\3\ See Real v. Driscoll Strawberry Assoc., Inc., 603 F.2d 748
(9th Cir. 1979); Griffin & Brand, supra.
\4\ Rutherford Food; Griffin & Brand, supra.
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The joint employment doctrine, which has long been recognized under
the FLSA case law,\5\ is defined by the FLSA regulation to mean a
condition in which ``[a] single individual stands in the relation of an
employee to two or more persons at the same time'' (29 CFR 791.2(a)). A
joint employment relation is found when ``employment by one employer is
not completely disassociated from employment by the other employer,''
such a determination depending upon ``all the facts in the particular
case.'' Id.
\5\ Griffin & Brand, supra.
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Under MSPA, the term employ has the same meaning as that term under
the FLSA. 29 U.S.C. 1802(5). Congress enacted this express
incorporation of the FLSA definition of employ with the deliberate
intention of adopting the FLSA case law defining employment and joint
employment. Congress specifically stated that the ``joint employer
doctrine'' articulated under the FLSA was to serve as the ``central
foundation'' of the MSPA and ``the best means by which to ensure that
the purposes of this Act would be fulfilled.'' 6 Congress intended
the joint employer doctrine to serve as a vehicle for protecting
agricultural employees ``by fixing the responsibility on those who
ultimately benefit from their labors--the agricultural employer.''
7 In declaring this purpose, Congress cited with approval the
joint employment analysis utilized by the Court of Appeals in Griffin &
Brand; thus, that decision should be the benchmark for the analysis in
the agricultural setting.8 The multi-factor test, as stated in
Griffin & Brand, is largely the same as the Supreme Court's seminal
decision in Rutherford Food, although the Court of Appeals restated
some factors to comport more fully and realistically with the unique
characteristics of an agricultural operation.
\6\ H. Rep. No. 97-885, 97th Cong. 2d sess. pp. 6-7 [``Rept.''].
\7\ 128 Cong. Rec. H26008 (Sept. 1982).
\8\ Rept. 7.
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The current MSPA regulation, promulgated in 1983, sets out a non-
exclusive list of factors which could appropriately be considered in
the joint employment analysis. 29 CFR 500.20(h)(4)(ii). The regulation
states that the ``. . . determination of whether the employment is to
be considered joint employment depends upon all the facts in the
particular case.'' 29 CFR 500.20(h)(4)(i). The factors identified in
the regulation were not intended by the Department to be a checklist
for determining a joint employment relationship; nor were the factors
intended to be given greater weight than other relevant factors
presented in a particular case or developed in the case law. To the
extent that courts and the regulated community may have strayed from
the ``economic reality''/``economic dependence'' analysis by applying
the regulation as a rigid checklist, or treating the regulation as an
exclusive list which precludes consideration of additional factors
(e.g., whether workers' activities are an integral part of the putative
employer's operation), or distorting or placing undue emphasis on
particular factors (e.g., ``control'' misconstrued as being direct
supervision of workers' activities), the regulation is not only
misinterpreted but is also being applied so as to frustrate the express
intention of Congress in enacting MSPA.
Proposed ``Joint Employer'' Rule
In order to resolve any confusion or misunderstanding of the
current MSPA regulation and to provide clearer and more complete
guidance to the regulated community, the regulation is proposed to be
amended to better delineate the appropriate analysis of the employment
and joint employment relationships using ``economic dependence'' as the
touchstone, as contemplated by Congress when MSPA was enacted. The
proposed regulation also addresses the crucial, initial issue of
whether a farm labor contractor (FLC) is a bona fide independent
contractor or an employee of the agricultural association or
agricultural employer; where an FLC is actually an employee of the
agricultural employer or association, any worker employed by the FLC is
necessarily also an employee of the FLC's employer. The proposed
regulation more clearly enunciates the proper test for joint
employment, as prescribed in the legislative history and set forth in
the case law that has properly focused on economic reality and economic
dependence. Further, the regulation will provide needed guidance on
``control,'' clarifying that the inquiry is as to the putative
employer's power or right to exercise authority in the workplace,
either directly or indirectly; the actual exercise of such power or
authority is not necessary. The regulation would be further clarified,
in that the illustrative list of factors eliminates redundancy (e.g.,
items in the current regulation dealing with aspects of control are
consolidated) and provides more complete guidance as to appropriate
consideration of factors. Comments are requested concerning the factors
listed, in particular whether or not additional factors should be
included in the illustrative list of factors.
Executive Order 12866/Section 202 of the Unfunded Mandates Reform
Act of 1995
This proposed rule is not ``economically significant'' within the
meaning of Executive Order 12866, nor does it require a Sec. 202
statement under the Unfunded Mandates Reform Act of 1995. However,
because the rule may raise novel legal or policy issues arising out of
legal mandates, it has been determined by OMB to be a ``significant
regulatory action'' within the meaning of Sec. 3(f)(4) of Executive
Order 12866. The proposed rule proposes to amend the MSPA regulations
to clarify the concepts of employ, employer, employee, and joint
employment. No economic analysis is required because the rule will not
have a significant economic impact.
Regulatory Flexibility Analysis
This proposed rule will not have a significant economic impact on a
substantial number of small entities. The Department has certified to
this effect to the Chief Counsel for Advocacy of the Small Business
Administration. The proposed rule contains language which is intended
to clarify what is meant by the terms employ, employer, employment, and
joint employment under MSPA.
Document Preparation
This document was prepared under the direction and control of Maria
Echaveste, Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor.
List of Subjects in 29 CFR Part 500
Agricultural employers, Agricultural associations, Agricultural
worker, Employ, Employee, Employer, Farm labor contractor, Independent
Contractor, Joint Employment, Migrant agricultural workers, Migrant
labor, Seasonal agricultural workers.
[[Page 14038]]
Signed at Washington, D.C., on this 26th day of March, 1996.
John R. Fraser,
Deputy Administrator, Wage and Hour Division.
For the reasons set forth above, 29 CFR part 500 is proposed to be
amended as set forth below:
PART 500--MIGRANT AND SEASONAL AGRICULTURAL WORKER PROTECTION
1. The authority citation for Part 500 is revised to read as
follows:
Authority: Pub. L. 97-470, 96 Stat. 2583 (29 U.S.C. 1801-1872);
Secretary's Order No. 6-84, 49 FR 32473.
2. In Sec. 500.20, paragraph (h)(4) is revised and paragraph (h)(5)
is added to read as follows:
Sec. 500.20 Definitions.
* * * * *
(h) * * *
(4) The definition of the term employ may include consideration of
whether or not an independent contractor or employment relationship
exists under the Fair Labor Standards Act. Under MSPA, questions will
arise whether or not the farm labor contractor engaged by the
agricultural employer/association is a bona fide independent contractor
or an employee. Questions also arise whether or not the worker is a
bona fide independent contractor or an employee of the farm labor
contractor and/or the agricultural employer/association. These
questions should be resolved in accordance with the factors set out
below and the principles articulated by the federal courts in
Rutherford Food Corp.v. McComb, 331 U.S. 722 (1947), Real v. Driscoll
Strawberry Assoc., Inc., 603 F.2d 748 (9th Cir. 1979), and Sec'y of
Labor, U.S. Dept. of Labor v. Lauritzen, 835 F.2d 1529 (7th Cir. 1987).
If it is determined that the farm labor contractor is an employee of
the agricultural employer/association, the agricultural workers in the
farm labor contractor's crew who perform work for the agricultural
employer/association are deemed to be employees of the agricultural
employer/association and an inquiry into joint employment is not
necessary or appropriate. In determining if the worker or farm labor
contractor is an employee or an independent contractor, the ultimate
question is the economic reality of the relationship--whether there is
economic dependence upon the farm labor contractor or agricultural
employer/association, as appropriate. This determination is based upon
an evaluation of all of the circumstances, including the following:
(i) The nature and degree of the putative employer's control as to
the manner in which the work is performed;
(ii) The putative employee's opportunity for profit or loss
depending upon his managerial skill;
(iii) The putative employee's investment in equipment or materials
required for the task, or the putative employee's employment of other
workers;
(iv) Whether the services rendered by the putative employee
requires special skill;
(v) The degree of permanency and duration of the working
relationship;
(vi) The extent to which the services rendered by the putative
employee are an integral part of the putative employer's business.
(5) The definition of the term employ includes the joint employment
principles applicable under the Fair Labor Standards Act. The term
joint employment means a condition in which a single individual stands
in the relation of an employee to two or more persons at the same time.
A determination of whether the employment is to be considered joint
employment depends upon all the facts in the particular case. If the
facts establish that two or more persons are completely disassociated
with respect to the employment of a particular employee, a joint
employment situation does not exist.
(i) If it is determined that the farm labor contractor is an
independent contractor, it still must be determined whether or not the
employees of the farm labor contractor are also jointly employed by the
agricultural employer/association. Joint employment under the Fair
Labor Standards Act is joint employment under the MSPA. Such joint
employment relationships, which are common in agriculture, have been
addressed both in the legislative history and by the courts.
(ii) The legislative history of the Act (H. Rep. No. 97-885, 97th
Cong., 2d Sess., 1982) states that the legislative purpose in enacting
MSPA was ``to reverse the historical pattern of abuse and exploitation
of migrant and seasonal farm workers . . .,'' which would only be
accomplished by ``advanc[ing] . . . a completely new approach'' (Rept.
at 3). Congress's incorporation of the FLSA term employ was undertaken
with the deliberate intent of adopting the FLSA joint employer doctrine
as the ``central foundation'' of MSPA and ``the best means by which to
insure that the purposes of this MSPA would be fulfilled'' (Rept. at
6). Further, Congress intended that the joint employer test under MSPA
be the formulation as set forth in Hodgson v. Griffin & Brand of
McAllen, Inc. 471 F.2d 235 (5th Cir.), cert. denied, 414 U.S. 819
(1973) (Rept. at 7). In endorsing Griffin & Brand, Congress stated that
this formulation should be controlling in situations ``where an
agricultural employer . . . asserts that the agricultural workers in
question are the sole employees of an independent contractor/
crewleader,'' and that the ``decision makes clear that even if a farm
labor contractor is found to be a bona fide independent contractor, . .
. this status does not as a matter of law negate the possibility that
an agricultural employer may be a joint employer . . . of the harvest
workers'' together with the farm labor contractor. Further, regarding
the joint employer doctrine and the Griffin & Brand formulation,
Congress stated that ``the absence of evidence on any of the criteria
listed does not preclude a finding that an agricultural association or
agricultural employer was a joint employer along with the crewleader'',
and that ``it is expected that the special aspects of agricultural
employment be kept in mind'' when applying the tests and criteria set
forth in the case law and legislative history (Rept. at 8).
(iii) In determining whether or not an employment relationship
exists between the agricultural employer/association and the
agricultural worker, the ultimate question to be determined is the
economic reality--whether the worker is so economically dependent upon
the agricultural employer/association as to be considered its employee,
subject to MSPA protections.
(iv) The factors set forth below are analytical tools to be used in
determining the ultimate question of economic dependency. The factors
are not to be applied as a checklist. They are illustrative only and
are not intended to be exhaustive; other factors may be considered,
depending upon the specific circumstances of the relationship among the
parties. No one factor is critical to the analysis; nor must a majority
of the factors be found for an employment relationship to exist.
Rather, how the factors are weighed depends upon all of the facts and
circumstances. Among the factors to be considered in determining
whether or not an employment relationship exists are:
(A) Whether the agricultural employer/association has the power,
either alone or through control of the farm labor contractor to direct,
control, or supervise the worker(s) or the work performed (such control
may be either direct or indirect, and may be either exercised or
unexercised, taking into
[[Page 14039]]
account the nature of the work performed);
(B) Whether the agricultural employer/association has the power,
either alone or in addition to another employer, directly or
indirectly, to hire or fire, modify the employment conditions, or
determine the pay rates or the methods of wage payment for the
worker(s);
(C) Whether the agricultural employer/association supplies housing,
transportation, tools and equipment or materials required for the job;
(D) The degree of permanency and duration of the relationship of
the parties, in the context of the agricultural activity at issue;
(E) The extent to which the services rendered by the workers are
repetitive, rote tasks requiring skills which are acquired with
relatively little training;
(F) Whether the activities performed by the worker are an integral
part of the overall business operation of the agricultural employer/
association;
(G) Whether the work is performed on the agricultural employer/
association's premises or on the premises owned or controlled by
another business entity;
(H) Whether the agricultural employer/association undertakes
responsibilities in relation to the worker which are normally performed
by employers, such as maintaining payroll records, preparing and/or
issuing pay checks, paying FICA taxes, providing workers' compensation
insurance, or providing field sanitation facilities; and
(I) Other facts bearing on economic dependency.
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[FR Doc. 96-7818 Filed 3-28-96; 8:45 am]
BILLING CODE 4510-27-P
