In today’s workplace, most employers rely upon outside vendors to supply security services. What employers may not know is that the fact that the security guards are not their own employees does not necessarily mean that the employer is not liable for violations of employment laws. The answer to the liability question turns in large part on how much control the employer has over the terms of employment for the guards.
On May 14, 2013, a federal court in Florida ruled that a bank was not the joint employer of security officers, and therefore could not be held liable for alleged overtime violations and retaliation under the FLSA. In Diaz v. U.S. Century Bank, No. 12-21224 (S.D. Fla. May 14, 2012), the court dismissed the FLSA claims against the bank, reasoning that the officers were not “economically dependent” on the bank under the eight factor test used by the United States Court of Appeals for the 11th Circuit. In the eyes of the court, the fact that the bank set the guards schedules, reviewed their hours of work, and occasionally gave them instructions did not make them bank employees. What was more significant was the bank’s lack of control over most of the essential terms and conditions of employment – including hiring, firing, and setting rates of pay.
While the bank in Diaz escaped FLSA liability, the case reinforces the importance to employers of maintaining a distance from contractor’s employees. The greater control the employer has, the more likely the employer will find itself jointly liable for its vendor’s employment law violations.