Article contributed by Ilan Weiser, Ellenoff Grossman & Schole LLP
Many of New York’s leading hospitality establishments use third-parties to staff events they host inside their venues. While such an arrangement may initially seem beneficial to the owners and operators of the venue itself, there is a degree of legal liability the venue may be exposed to if it does not implement certain safeguards in its day-to-day operations concerning those staffers working on its premises.
A New York-based venue, such as a catering hall, convention center, sports stadium, hotel or restaurant would be wise to significantly limit its control over any temporary on-site staff so as to avoid being classified as a joint employer of those workers.
Both New York law and federal law set forth various factors to determine whether an individual may assert liability against an entity that is not formally their employer. Or, in other words, an individual may be employed by one entity (the staffing agency), is assigned to work elsewhere (the venue), but can still allege liability against both entities.
In order to determine whether that second entity (the venue) is constructively employing that individual, the courts look to whether the venue:
- Did the hiring and firing;
- Supervised and controlled employee work schedules or conditions of employment;
- Determined the rate and method of compensation; and/or
- Maintained employment records.
The courts also analyze whether the individual staffer asserting joint-employer liability against the venue:
- Worked at their own convenience;
- Was free to engage in other employment;
- Received fringe benefits;
- Which entity’s payroll they were on; and/or
- Whether the individual was on a fixed schedule.
New York hospitality establishments should analyze their current relationships with the staffing and temporary placement agencies they contract with and who provide them with staff such as servers, bussers, and bartenders. The above factors are not exhaustive. Even if the venue satisfies all of the listed factors above, there are still certain ways an employee of a staffing agency may be able to establish that the venue, too, is also their employer.
The critical inquiry to determine whether such a joint employer relationship exists pertains to the degree of control exercised by the purported employer over the employee of the staffing agency. In a general sense, the staffing agency should be the only entity concerned with the basic terms of the staffer’s employment, such as onboarding, scheduling of assignments and document retention. The staffer should only be receiving company policies, or an employee manual, from the staffing agency itself. The staffing agency should be the only entity providing any materials and/or equipment the staffer requires in order to perform their job, such as aprons or a uniform.
The venue should also make sure that the staffing agency has its own management on-site supervising its respective staff. The staffing agency’s manager should be the one checking staffers in and out and recording their time worked, as well as conducting team meetings to discuss the event and each staffer’s tasks, assignments, and the event menu, without the involvement or presence of the venue’s representatives. The venue, at a maximum, should only exercise incidental control over the staffers working inside their establishment, or in other words, simply making sure the event goes smoothly without having direct interaction with the staffing agency’s employees.
Labor law claims that assert joint employer liability against hospitality establishments and staffing agencies are not unique to New York, however, New York establishments are among the most vulnerable to costly claims by employees of the staffing agency. Specifically, New York’s statute of limitations for labor law violations allow plaintiffs to seek damages back six years, whereas New Jersey or federal law, for example, only provide for a two or three year state of limitations.
Moreover, New York’s stringent laws pertaining to mandatory charges such as administrative/service fees may allow the staffing agency’s employees to recover those charges as purported gratuities if certain technical requirements are not met. Many New York establishments have been held liable for unpaid gratuities to staffers such as bartenders and servers under a joint-employer theory because of the degree of control and supervision exercised, even though the venue did not directly employ those staffers.
In essence, the less the venue is involved, the less chance there is of the venue being deemed a joint employer and potentially being on the hook for any labor violation committed by the staffing agency. No two situations are the same. The court will always make a separate factual assessment of the degree of control exercised by the venue in determining whether a joint employer relationship exists. New York hospitality establishments who utilize the services of staffing agencies and their employees are urged to examine their practices to ensure their involvement is as limited as possible as it pertains to the staffers who work on their premises.
Ilan Weiser is an Associate in the Labor & Employment practice group at Ellenoff Grossman & Schole LLP in New York City. Mr. Weiser exclusively represents businesses of all sizes and sectors on how best to comply with the federal, state and local labor laws that govern their operations. Mr. Weiser’s principal area of expertise is employment law litigation and has vigorously defended hundreds of his clients in federal and state court and before various governmental agencies against claims of employment discrimination and unfair pay practices. Mr. Weiser has particularly in-depth knowledge of wage and hour law and regularly defends and counsels his clients in class and collective lawsuits concerning claims for unpaid wages. Mr. Weiser is also the Chair of the Labor & Employment Subcommittee of the New York City Bar Association Hospitality Committee. He can be reached by phone at 212-370-1300 or by email at iweiser@egsllp.com
