Monday, August 11, 2008

Bellevue is on the hook for FLSA damages

Working for several masters does not mean that you can't sue one of them for overtime violations. So, when one contract employee was directly employed by three referral agencies which each arranged for her employment at Bellevue Hospital, the Second Circuit says she could sue the hospital for the denial of overtime pay even though she did not work more than 40 hours per week for any particular referral agency.

The case is Barfield v. New York City Health and Hospitals Corp., decided on August 8. Barfield is a certified nursing assistant whose working relationships are complicated enough that she worked overtime at the hospital on behalf of the three employment agencies. Because she was not paid overtime, under the Fair Labor Standards Act, she sued Bellevue, and not the employment agencies. Question: is Bellevue the right defendant? Yes, because the hospital was a joint employer.

This issue may seem complicated, but the district court granted Barfield summary judgment on this issue, a rare occurrence. The Second Circuit affirmed because Barfield satisfied the "economic realities" test governing joint employment under the FLSA. As the Court of Appeals notes, the joint employment theory under that remedial stature favors the employee in order to promote the important goals of the FLSA, which guarantees hourly employees overtime pay if they work more than 40 hours a week. While she technically worked for the employment agencies, Barfield wins because Bellevue did exercise some control over her employment and it could fire at will the agency employees like her. She also used Bellevue equipment , her work was integral to the hospital's operations and the hospital controlled the on-site terms of her employment. All this makes Bellevue a joint employer under the FLSA.

The moral of the story is that "even when one entity exerts 'ultimate' control over a worker, that does not preclude a finding that another entity exerts sufficient control to qualify as a joint employer under the FLSA," the Court of Appeals reminds us.

Good news for Barfield, who recovers damages. But not so good news for her attorney, who moved for attorneys' fees. He recovered them, but the district court cut them in half to account for counsel's failed effort to certify a collective action on behalf of many other employees. The Court of Appeals agrees with the trial court that the reduction in attorneys fees is warranted because the attorney's primary goal in bringing the case was to certify a collective action. Awarding counsel full attorneys' fees for this failed effort would decrease the incentive for lawyers to vigorously litigate collective action certification and encourage lawyers to file collective action claims even where there is little basis for doing so.

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