Maryland Court of Special Appeals Issues Decision Involving Joint Employer Standard

The issue of joint employer status is a particularly hot topic at this time and, in an opinion of particular interest to Maryland employers, the Maryland Court of Special Appeals has weighed in on this issue in Uninsured Employers’ Fund v. Tyson Farms, Inc., in a manner that generally favors a joint employer finding.

Case Background. The employee raised chickens on a farm owned by his employer (“Farm Owner”). The chickens were owned by Tyson Farms (“Tyson”) and were raised by the Farm Owner according to Tyson’s guidelines and best practices. The Farm Owner purchased the chicken farm as an investment and did not know how to operate it. Because the Farm Owner was considered an “absentee owner,” Tyson’s contract with the Farm Owner required the employee to be present 24 hours a day, 7 days a week, to ensure proper operation of the farm.

The employee suffered injuries at work and filed a workers’ compensation claim against the Farm Owner, who did not have workers’ compensation insurance. As a result, the employee and the Uninsured Employers’ Fund (“UEF”) added Tyson to the claim. The Workers’ Compensation Commission held that the Farm Owner and Tyson were joint or co-employers of the employee at the time of his injuries.

The Court’s Decision. Under Maryland law, a court reviews five factors to determine whether an employer-employee relationship exists: (1) the power to select and hire the employee, (2) the payment of wages, (3) the power to discharge, (4) the power to control the employee’s conduct, and (5) whether the work is part of the regular business of the employer. The Court further stated that the factor of control is the most important and is the only factor that is decisive.

A two-judge majority of the Court panel found that Tyson was intimately involved in nearly every aspect of the work that the employee did at the farm. Tyson directed the employee’s tasks at the farm, and it had the power to instruct the employee to alter his performance in doing those tasks to follow Tyson’s requirements. The majority also noted that while Tyson did not have the express authority to discharge the employee, it had the power to terminate its contract with the Farm Owner if the employee was not in compliance with Tyson’s requirements. Thus, the majority concluded that Tyson was a co-employer of the employee based on the level of control that Tyson had over how and when the employee completed his work.

The dissenting judge, however, would not have found joint employment to exist. He stated that “control of the workplace” is not the same as “control of the worker.” He noted that Tyson did not select or hire the employee, did not set wages or work hours, could not fire him, and communicated with the Farm Owner about changes in chicken raising practices. In addition, the Farm Owner had authorized the employee to act on his behalf in running the farm, and the employee’s interactions with Tyson were in that capacity. Additionally, the Farm Owner was responsible for taking care of his employees and servicing the contract. Finally, he had the ability to terminate the contract, and thereby had ultimate control over whether the employee would continue to have a job.

It is likely that the case will be appealed, which means that Maryland’s highest state court will weigh in on how the evidence should be applied in the joint employer determination. In addition, it is important to note that while Maryland state courts follow the above test, there are different tests that exist for determining joint employer status in other contexts. As we discussed in our January 13, 2020 E-Lert, the Department of Labor issued its Final Rule making it less likely that companies will be deemed joint employers of a single employee under the Fair Labor Standards Act, while Maryland federal courts apply a different, stricter standard. The NLRB and the EEOC plan to issue their own Final Rules on joint employer status as well. What this means is that employers may be subject to multiple standards for determining employee status, and should consult with counsel when faced with making such determinations.