11734 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

1Strict liability as used by the commenters

appears to mean ‘‘per se’’ liability. Per se liability

in this context means that agricultural employers/

associations are responsible for violations

committed by the farm labor contractor if they

merely retain or benefit from the services of the

farm labor contractor.

DEPARTMENT OF LABOR

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: Final rule.

SUMMARY: This document amends the

regulations concerning the definition of

‘‘employ’’ under the Migrant and

Seasonal Agricultural Worker Protection

Act (MSPA) to include a definition of

‘‘independent contractor’’ and to clarify

the definition of ‘‘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: This final rule is effective April

11, 1997.

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 Final

Rule 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 Final Rule contains no reporting

or recordkeeping requirements subject

to the Paperwork Reduction Act of 1995

(Pub. L. 104–13).

II. Background

The MSPA statutory definition of

‘‘employ’’, 29 U.S.C. 1802(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.

The MSPA definition of ‘‘joint

employment,’’ 29 CFR 500.20(h)(4), is

amended by this Final Rule to clarify

and provide more accurate and

complete information to the regulated

community, thereby making the MSPA

regulations more ‘‘user-friendly.’’ The

regulation, as amended, 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. In keeping

with the President’s Executive Order

directive (No. 12866, ‘‘Regulatory

Planning and Review,’’ September 30,

1993 [58 FR 51735 (October 4, 1993)])

to Federal agencies to identify rules that

could be clarified to provide more

complete and understandable guidance

to the regulated community, the

Department is amending the MSPA

‘‘joint employment’’ regulation. The

Department published a Notice of

Proposed Rulemaking in the Federal

Register on March 29, 1996 (61 FR

14035–14039). The public comment

period on the proposed regulatory

changes closed on June 12, 1996.

III. Comments to the Proposed

Regulatory Revision

A. Comments to the Proposed Rule

Comments to the Notice of Proposed

Rulemaking (NPRM) were received from

organizations, public officials and

individuals representing the views of

members of Congress, farmworker

advocacy groups, farmworker labor

unions, agricultural associations,

agricultural employers, farmworker

legal services programs, religious

organizations serving farmworkers,

lawyers representing farmworkers, and

individuals. These 41 comments were

submitted on behalf of over 91

organizations and individuals, 63

generally supportive of the NPRM and

28 generally opposed. The Department

also received comments from the United

States Department of Agriculture

(USDA) after the public comment period

and during the course of review of the

final regulation pursuant to Executive

Order 12866.

The commenters were broadly

representative of two points of view:

those who support the NPRM, and those

who oppose the proposal and contend it

should be withdrawn. The supporters of

the NPRM assert that the change in the

regulation is necessary to correct the

confusion which has developed under

the current regulation, and that the

proposal accurately reflects the law

governing the determination of

independent contractor and joint

employment status. Those opposed to

the NPRM contend that it effectively

creates a ‘‘strict liability’’ 1 rule which

will automatically result in the

determination that an agricultural

employer who uses a farm labor

contractor is a joint employer of the

workers in the contractor’s crew.

Consequently, these commenters

suggest that the NPRM be withdrawn

and the current regulation be left

undisturbed.

The comments from the Members of

Congress, farmworker unions, service

organizations, and legal services

programs primarily focused on two

subjects: the broad scope of ‘‘employ’’ in

MSPA (particularly as it pertains to the

statutory term ‘‘suffer or permit to

work’’) which is the statutory basis of

‘‘independent contractor’’ and ‘‘joint

employment’’; and suggested changes to

the precise formulation of the analytical

factors set forth in the NPRM. The

comments from agricultural employers

and associations also focused on two

subjects: asserting that the Department

was creating a strict liability joint

employment standard which would

always result in a finding of joint

employment whenever an agricultural

employer/association utilizes the

services of a farm labor contractor; and

questioning the Department’s legal

authority to adopt the proposed

regulation.

B. Summary of Comments

1. Members of Congress

A joint comment was submitted by

Rep. George Miller and Rep. Howard

Berman supporting the Department’s

proposed rule.

2. Agricultural Employers and

Associations

Comments were submitted by

Agricultural Producers, American Farm

Bureau Federation, California Grape and

Tree Fruit League, Florida Fruit and

Vegetable Association, Hood River

Grower-Shipper Association, Maine

Farm Bureau Association, Michigan

Farm Bureau, Midwest Food Producers

Association, National Cotton Ginners’

Association, New England Apple

Council, Nisei Farmers League,

Pennsylvania Farm Bureau, United

States Sugar Corporation, Venture

County Agricultural Association,

Virginia Farm Bureau Federation,

Washington State Growers Clearing

House Association, and the Washington

State Farm Bureau. All of these

comments struck common themes most

fully expressed in the comments from

the National Council of Agricultural

Employers (NCAE). NCAE asserts that

the NPRM proposes to create an

unlawful strict liability joint

employment standard for agricultural

employers or associations who use the
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11735

2H.R. Rep. No. 885, 97th Cong., 2d Sess. 1,

reprinted in 1982 U.S.C.C.A.N. 4547 (’’House

Comm. Rept.’’).

3 128 Cong. Rec. 26,009 (1982) (statement of Rep.

George Miller).

4 Id, at 26,008. 5 § 500.20(h)(5),(h)(5)(iv).

services of farm labor contractors, and

the Department has not stated a legally

sufficient factual basis for the proposed

regulatory change. The NCAE comments

will be addressed below.

In addition to NCAE and other similar

comments, three agricultural

organizations submitted comments that

addressed issues not fully explored in

the NCAE comments. The American

Pulpwood Association and the

American Forest & Paper Association

both suggest that reforestation

contractors which the industry engages

are independent contractors and would

not be joint employers with the industry

under the proposed rule. Further, these

organizations suggest that the

Department should clarify the analytical

factor—set out in the NPRM at

500.200(h)(5)(iv)(H)—pertaining to the

maintenance of payroll records and

provision of field sanitation facilities.

These issues are addressed below.

Florida Citrus Mutual (FCM)

submitted comments in which it

contends that the primary test for joint

employment is control, i.e., who

exercises direct control over the

workers. Further, FCM contends that the

House Education and Labor Committee

Report relied upon by the Department in

developing the NPRM is neither lawful

nor appropriate guidance. Finally, FCM

suggests that some of the listed

analytical criteria are inappropriate for

the joint employment determination.

These issues too are addressed below.

3. Labor Organizations, Farmworker

Advocates, Legal Services Organizations

and Attorneys

Comments submitted by the American

Federation of Labor and Congress of

Industrial Organizations (AFL–CIO),

California Rural Legal Assistance,

California Rural Legal Assistance

Foundation, Columbia Legal Services of

Washington, Farmworker Justice Fund,

Friends of Farmworkers of

Pennsylvania, Garry Geffert, Migrant

Farmworker Justice Project of Florida,

Migrant Legal Action Program, National

Council of La Raza, North Carolina

Council of Churches, the United Farm

Workers of America, and United Farm

Workers-Texas Division, on behalf of

themselves and many other

organizations, generally supported the

proposed regulations. These comments

endorsed the general approach of the

NPRM but suggested that additional

changes should be considered to make

the definitions of ‘‘employ,’’

‘‘independent contractor,’’ and ‘‘joint

employment’’ clearer and unambiguous.

C. Analysis of Comments

1. Congressional Comments

Representatives George Miller and

Howard Berman support the NPRM,

stating that it implements the legislative

intent to create a broad standard of

coverage under MSPA by incorporating

the definition of ‘‘employ’’ from the Fair

Labor Standards Act (FLSA). Further,

their joint comment contends that the

NPRM corrects the current regulation’s

incomplete and inaccurate guidance to

the public and the courts concerning the

scope of employer responsibility under

MSPA. The commenters also assert that

Congress intentionally adopted an

expansive definition of ‘‘employ’’ when

it incorporated the FLSA definition and

eschewed the traditional common law

‘‘right to control’’ test. 2

The Congressional commenters

further state that in the enactment of

MSPA, Congress recognized that the

adoption of the broad FLSA definition

of ‘‘employ’’ would result in the

frequent imposition of liability on

growers because the types of

relationships Congress intended to

cover through joint employment are

common in agriculture. In floor debate

on the bill, Rep. Miller (a cosponsor)

had pointed out that the FLSA concept

of joint employment ‘‘presented the best

means by which to insure that the

purpose of this Act would be fulfilled’’ 3

and that incorporating FLSA joint

employment into MSPA would fix

‘‘ * * * responsibility on those who

ultimately benefit from [the workers’]

labor—the agricultural employer.’’ 4

For these and other reasons stated in

their comment, the Congressional

commenters support the proposed rule

and urge its speedy adoption.

2. The American Pulpwood Association

and American Forest and Paper

Association

The American Pulpwood Association

(AP Assoc.) and American Forest &

Paper Association (AF&PA) contend the

proposed regulation fails to afford

primacy to the common law test of

‘‘right to control’’ in determining joint

employment. According to AP Assoc.

and AF&PA, the test for joint

employment is properly viewed as a

question of the contractual relationship

between the farm labor contractor (FLC)

and the agricultural employer/

association. Further, the organizations

assert that under this analysis the

typical arrangement in the reforestation

industry will fall outside the scope of

joint employment.

The Department disagrees that the

proper legal analysis should turn

exclusively on contractual arrangements

among an FLC and the agricultural

employer/association. The proposed

rule is carefully crafted to reflect the

analytical framework within which a

determination of independent

contractor and joint employment is to

occur. Because such an analysis is

dependent on all the facts of a particular

situation, it is impossible to conclude

that the relationships described by these

commenters as typical in the

reforestation context—that is, where the

reforestation contractor has all the

indicia of common law right to

control—could not result in a

determination of joint employment.

The current regulation and the

proposed amendment make clear that

neither independent contractor nor joint

employment determinations under

MSPA are reached only by the

‘‘traditional common law test of ’right to

control’’’ as suggested by the AP Assoc.

and the AF&PA. While ‘‘right to

control’’ is one of several factors that

must be considered in the analysis, the

absence of such control on the part of

a forestry company does not

conclusively determine that a

reforestation contractor is a bona fide

independent contractor or that there is

no joint employment relationship

between the forestry operator and the

workers in the reforestation crew. As

stated in the proposed regulation, the

determination ‘‘depends upon all the

facts in the particular case * * * [n]o

one factor is critical to the analysis

* * *’’5 Contractual designations or

notions of common law control, while

certainly relevant, are not controlling.

The AP Assoc. and the AF&PA also

contend that it is inappropriate to

include ‘‘maintaining payroll records’’

as a factor in the joint employer analysis

at proposed regulation

500.20(h)(5)(iv)(H). The associations

point out that an agricultural employer

or association is obligated under MSPA

to ‘‘retain’’ and ‘‘keep’’ payroll records

created by a farm labor contractor,

regardless of joint employer status. The

associations suggest that the proposed

rule would use this legal obligation as

a factor in determining joint

employment and thus creates an

untenable choice for the agricultural

employer or association: ‘‘retain’’ and

‘‘keep’’ these FLC payroll records

(’’maintain’’ them) and thereby create

indicia of employment that will come to
11736 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

6 29 CFR 1928.110(b)(i)-(iii); (c).

7American Hospital Ass’n v. NLRB, 899 F.2d 651,

657 (7th Cir. 1990), aff’d 499 U.S. 606 (1991).

8Beliz v. W.H. McLeod & Sons Packing Co., 765

F.2d 1317, 1327 (5th Cir. 1985); Castillo v. Givens,

704 F.2d 181, 192 (5th Cir.), cert. denied, 464 U.S.

850 (1983); Fahs v. Tree Gold Co-op Growers of

Florida, Inc., 166 F.2d 40, 43 (5th Cir. 1948).

play in a joint employment analysis, or

violate the law by not maintaining the

FLC payroll records in order to avoid

that result. The associations’ concern in

this regard is based on what the

Department views as a reasonable but

unintended interpretation of the word

‘‘maintaining’’ in the proposed rule.

This word is used in the proposed rule

in the active sense of ‘‘preparing’’ or

‘‘making,’’ rather than in the passive

sense of merely ‘‘retaining’’ or

‘‘keeping.’’ However, the Department

agrees that some clarification in the

regulatory language would be helpful in

order to convey that the proper

consideration is not who ‘‘retains’’ the

payroll records but rather who

‘‘prepares or makes’’ the payroll records.

The obligation to ‘‘make’’ payroll

records is clearly an employer function

under MSPA, 29 CFR 500.80(a), and is

appropriate to consider in the joint

employer analysis. The Final Rule

provides this clarification.

The AP Assoc. and the AF&PA

suggest that a similar flaw exists in the

proposed regulation at

500.20(h)(5)(iv)(H) regarding the

provision of field sanitation facilities.

The Department does not agree. While

retaining copies of FLC-created payroll

records is not indicative of employer

status, the provision of field sanitation

facilities is an obligation which rests

with employers under the Occupational

Safety and Health Act regulations.6

When a putative employer voluntarily

assumes responsibility for workplace

obligations that the law imposes on

employers, this voluntary assumption of

such responsibility indicates the

putative employer’s assumption of

employer status for other purposes and

is relevant to whether or not the

employees were economically

dependent upon the putative employer

for a workplace protection or benefit,

such as field sanitation facilities.

Therefore, the provision of field

sanitation facilities is an appropriate

fact to be considered in the joint

employment analysis.

3. Florida Citrus Mutual

Florida Citrus Mutual (FCM) raises a

number of issues (some of which will be

addressed more fully in the analysis of

the NCAE comments below) that

question both the legality of the

proposed regulation and the extent to

which the NPRM factors reflect the

proper considerations in determining

joint employment.

The question of legality hinges largely

on the FCM contention that the

Department inappropriately relies on

MSPA legislative history, specifically

the 1982 House Committee Report, to

guide its interpretation of ‘‘employ’’ and

the definition of independent contractor

and joint employment. The Department

disagrees. When developing

implementing regulations, the

Department can and should be guided

by the Congressional purpose as

expressed in the statutory language and

the legislative history. MSPA arose in

the House Education and Labor

Committee, Subcommittee on Labor

Standards. That Committee’s view of the

purpose it was seeking to serve by

incorporating the FLSA definition of

‘‘employ’’ into MSPA provides essential

guidance to the Department in

construing that term. The Department

has an obligation to consider this

Congressional guidance in

implementing legislation through

regulations. Therefore, the NPRM seeks

to incorporate the Congressional intent

as well as the construction given to the

critical term by the courts over the last

50 years.

FCM’s contention that the Committee

Report does not reflect Congressional

intent is unfounded. Committee reports

are one of the most important sources of

legislative history. As one court has

explained, where ‘‘Congress does enact

a statute, the committee reports

explaining it may have considerable

significance in guiding interpretation’’

and may serve as an indication of

‘‘expressed purposes of the drafters of

statutory language * * *’’ 7 In the case

of MSPA, the Committee Report was

particularly thorough and precise. It

included the text of the bill, described

its contents and purposes, and gave

reasons for the Committee’s

recommendations including the

recommendation on ‘‘employ’’ and joint

employment which was adopted by

Congress via enactment of the bill. The

Committee’s extensive treatment of the

joint employment issue evidences the

importance of the principle as a ‘‘central

foundation’’ of the statute.

Further, this FCM argument regarding

use of legislative history to develop

regulations ignores the other bases for

this proposed regulation. The

Department did not rely solely on

legislative history but also looked to its

own enforcement experience under

MSPA and the substantial amount of

case law construing joint employment.

FCM also disagrees with the proposed

rule’s analytical framework for

considering questions of independent

contractor and joint employment status,

both of which arise from the definition

of ‘‘employ’’. FCM states that ‘‘it is

virtually impossible for unskilled

manual laborers, offering nothing more

than two willing hands, to be an

independent contractor’’; a view shared

by the Department as to the likely status

of such workers. However, while FCM

acknowledges that unskilled

farmworkers will be the employees of

someone, FCM takes issue with the

proposed analytical framework for

identifying the workers’ employer or

joint employers in that the regulation

would look to factors beyond the terms

of any contractual agreement between

the agricultural employer/association

and the FLC. FCM’s position is that to

the extent any other factors are relevant

and appropriate for consideration, only

common law right to control should be

considered.

FCM contends that relationships

between an agricultural employer/

association and FLC fall into two

categories. In the first, the FLC is so

controlled by the agricultural employer/

association that ‘‘* * * he is a foreman/

employee of the farmer * * *’’ rather

than an independent contractor doing

business with the farmer, and all the

workers in the crew are direct

employees of the agricultural employer/

association. The Department agrees that

an FLC could very well operate as an

employee of the agricultural employer/

association, and his/her crew members

would also be direct employees of that

employer. However, the Department

disagrees with the basis for FCM’s

assertion. Court cases on this issue make

it clear that it is not simply control but

all the facts bearing on economic

dependence that determine the status of

the FLC.8 The agricultural employer/

association’s control of the FLC is

probative but not necessarily

determinative of the FLC’s employee/

independent contractor status.

Acknowledgment must be given to the

extensive case law which evaluates

economic dependence by looking

beyond the control factor to consider

other factors such as those set out in the

proposed rule at 500.20(h)(4)(i)–(v).

The second category of relationship

identified by FCM is one in which it is

determined that the FLC is an

independent contractor and not an

employee of the agricultural employer/

association; the FLC’s crew members are

his/her employees. FCM asserts that in

such circumstances the two tests of joint

employment on the part of the

agricultural employer/association

should be the contractual agreement
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11737

9House Comm. Rept. at 4552–53.

10House Comm. Rept. at 4553; Real v. Driscoll

Strawberry Assoc. Inc., 603 F.2d 748, 755 (9th Cir.

1979), citing Rutherford Food Corp. v. McComb,

331 U.S. 722, 729 (1947); Usery v. Pilgrim Equip.

Co., 527 F.2d 1308, 1315 (5th Cir.), cert. denied, 429

U.S. 826 (1976); Hodgson v. Griffin and Brand of

McAllen Inc., 471 F.2d 235, 237–238 (5th Cir.), cert.

denied, 414 U.S. 819 (1973).

11House Comm. Rept. at 4553; Griffin and Brand

at 237.

12House Comm. Rept. at 4553; Hodgson v. Okada,

472 F.2d 965 (10th Cir. 1973); Zavala v. Harvey

Farms, No. 94–225–M Civil (D.N.M., February 1,

1996) (Joint employer found even though court

determined the FLC exercises the supervisory

control).

13House Comm. Rept. at 4552.

14 Ibid.

15 29 CFR 500.20(h)(4)(ii); Aimable v. Long &

Scott Farms, 20 F.3d 434, 438 (11th Cir.), cert.

denied, 115 S.Ct. 351 (1994).

between that party and the FLC, and the

extent to which the agricultural

employer/association retains the

contractual right to control the workers.

To the extent that it is appropriate to

look beyond the terms of any

contractual agreement, FCM asserts that

control factors alone should govern the

determination of joint employment by

an agricultural employer/association

and an independent contractor FLC.

The Department disagrees with the

contention that common law control

elements should be given undue weight

in the joint employment analysis. As

established by the courts and the

current MSPA regulation, the test for

joint employment under MSPA does not

allow, much less require, that the

determination be made exclusively or

primarily by considering the description

of control in any FLC contractual

agreement or the actual exercise of

control over the agricultural workers.

Such unwarranted reliance on

contractual labels and common law

control was one of the primary reasons

why Congress incorporated the FLSA

definition of ‘‘employ’’ into MSPA.9

The legislative history and case law

are clear that ‘‘it is the economic reality,

not contractual labels * * *’’ that

determines the employment

relationships under the Act.10 Further,

Congress stated 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 or association

may be a joint employer of the harvest

workers and jointly responsible for the

contractor’s employees.’’11 While a

finding that there are sufficient indicia

of control to satisfy the common law test

of an employment relationship would

most likely result in a similar

determination under MSPA/FLSA, a

finding of common law control is not a

prerequisite to finding that a joint

employment relationship exists.12

4. The National Council of

Agricultural Employers

The National Council of Agricultural

Employers (NCAE), a Washington, D.C.

based association representing growers

and agricultural organizations on

agricultural labor and employment

issues, submitted extensive comments

on the proposed regulation. NCAE is

strongly opposed to any change in the

current regulatory definition of joint

employment. NCAE asserts that the

Department is inappropriately and

unlawfully seeking to discourage the

use of farm labor contractors by

establishing a strict liability standard for

agricultural employers/associations who

use the services of FLCs; that the

proposed rule is without a factual or

legal foundation; that the proposed rule

violates the Administrative Procedure

Act because it is arbitrary and

capricious; that the proposed rule is not

user-friendly; and that the proposed rule

ignores existing law. These issues are

addressed below.

a. Strict Liability

NCAE contends that the proposed

regulation effectively establishes a strict

liability test for joint employment. The

motive ascribed to the Department is

that the Department is seeking to

discourage agricultural employers/

associations from using FLCs, thereby

driving FLCs from the labor market,

disrupting the agricultural labor supply,

and empowering unions to substitute for

FLCs in providing labor to employers.

Further, the NCAE asserts that the

alleged strict liability standard would

allow the Department and farmworker

legal services lawyers to reach into the

deep pockets of agricultural employers/

associations when violations occur,

without the need to produce adequate

evidence bearing on the joint

employment determination. Finally,

NCAE asserts that creation of the alleged

strict liability through a regulatory

change would be an illegitimate attempt

to establish a legal standard which

Congress and the courts have been

unwilling to adopt. For the reasons

stated below, the Department disagrees

with the contention that the NPRM

creates a strict liability standard.

The proposed definition of joint

employment is a reiteration of wellestablished legal principles developed

by the courts and explicitly endorsed by

Congress when it enacted MSPA. Both

the analytical framework set out in the

proposed regulation (economic

dependence) and the test used to

examine economic dependence (the

analytical factors) were derived from the

cases found in the legislative history

and other cases deciding joint employer

issues both before and since MSPA’s

enactment. The Department has very

specifically avoided creating ‘‘strict

liability’’ through any regulatory test

which would operate based on a

presumption that a joint employment

relationship exists. The current

regulation as well as the proposed

regulation expressly states that the

presence or absence of one or more of

the analytical factors is not dispositive.

All the facts in each particular case

must be considered using the factors

identified in the regulation and any

other relevant factors. The Department

has not proposed any result-oriented

‘‘strict liability’’ or presumption test for

determining either independent

contractor or joint employment status.

Instead, the Department has proposed a

flexible test for joint employer which is

consistent with the case law, the

legislative history, and the current

regulation which (as explained in the

NPRM) is clarified and made more userfriendly by the proposed changes.

Some of the concerns expressed by

NCAE may be attributable to the

statement in the current and proposed

regulations that joint employment

relationships are ‘‘common’’ in

agriculture. As Congress recognized

when it enacted MSPA, the joint

employment doctrine is ‘‘the central

foundation of this new statute; it is the

indivisible hinge between certain

important duties imposed for the

protection of migrant and seasonal

workers and those liable for any breach

of those duties.’’ 13 Citing favorably the

U.S. Supreme Court’s characterization

of ‘‘employ’’ under FLSA in United

States v. Rosenwasser, 323 U.S. 360

(1945), the Committee stated that ‘‘a

broader or more comprehensive

coverage of employees within the stated

concept would be difficult to frame.’’ 14

However, the recognition that the

definition of ‘‘employ’’ (of which joint

employment is one aspect) is very broad

under MSPA does not lead to the

presumption that joint employment is

always present. The proposed rule does

not create a strict liability standard that

mandates the finding of joint

employment in every instance in which

an agricultural employer/association

retains the services of a FLC. As the

Department and the courts have

recognized in the current definition of

‘‘joint employment’’ under MSPA,

‘‘* * * joint employment relationships

are common in agriculture. * * *’’,15

but that observation does not require or
11738 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

16See Antenor v. D & S Farms, 88 F.3d 925, 932

(11th Cir. 1996).

17House Comm. Rept. at 4553.

inevitably lead to the creation of a strict

liability standard or presumption.

The NCAE assertion that the proposed

rule creates strict liability is misplaced

for another reason. The structure and

language of the proposed rule disavow

any such presumption by expressly

requiring an examination of all the facts

of each case using a multifactor

analytical framework to resolve the

ultimate question of economic

dependence, which NCAE concedes is

the relevant inquiry. While the

proposed rule sets out certain factors

that are probative of the joint

employment relationship, the proposed

rule makes it abundantly clear that the

ultimate test is ‘‘* * * whether the

worker is so economically dependent

upon the agricultural employer/

association as to be considered its

employee. * * *’’ NPRM at

500.20(h)(5)(iii). The factors are merely

tools to be used to answer the ultimate

question of economic dependence and

are neither to be used as a checklist nor

as an exhaustive list of relevant

factors.16

Each potential joint employment

situation must be examined on its

peculiar or special facts. The legislative

history is clear that there are a broad

range of factual situations, and that each

must be assessed based on its own

distinct circumstances.17 In the

proposed rule, the Department more

clearly, completely, and accurately sets

out the appropriate method for

analyzing these circumstances.

There is no presumption or automatic

joint employment. There are

circumstances which do not constitute

joint employment. Some of the factors

in the proposed rule are frequently

present in the typical agricultural

situation and, therefore, might lead to a

determination of employment or joint

employment status on the part of the

agricultural employer/association. But

such a determination must be made on

all the facts in a particular case. Despite

NCAE’s assertion, the proposed rule

does not compel a determination that

joint employment exists whenever a

farm labor contractor or other service

provider is utilized.

For example, in some crops, a grower

may sell his/her entire crop to a

harvesting company, which becomes

responsible for harvesting and

transporting the crop to storage or

market; or a grower may turn his/her

entire harvesting operation over to a

farm labor contractor, who makes all the

meaningful decisions regarding the

harvesting of the crops and provides

his/her own materials and equipment

needed in the harvest, such as with

custom combiners who harvest grain

crops or other custom harvesting

operations common in many

agricultural commodities.

Another example is where an

agricultural employer/association

secures the services of a FLC and sets

out ultimate performance standards for

the job, but then has no right to control

or further involvement in the work or

the employment, all of which are in the

FLC’s hands. The FLC and his/her

employees are free to schedule work

under any other contracts. The FLC

provides all the equipment, tools and

resources necessary to complete the job

for which his/her services were retained

and to manage all aspects of the

workers’ employment. The FLC has the

financial and managerial ability to

conduct his/her business without the

involvement or assistance of the

agricultural employer/association and

undertakes all the responsibilities

commonly performed by an employer.

This and similar arrangements are not

uncommon in agriculture. In such

situations, an application of the

economic dependence analysis is

unlikely to result in a determination

that the grower is an employer or joint

employer under the MSPA.

In both of the above examples, it is

quite common for the agreement

between the agricultural employer/

association and the farm labor

contractor to explicitly state which

party has responsibility for meeting

certain obligations. The mere fact that

the agricultural employer/association

enters into an agreement making the

farm labor contractor exclusively

responsible for functions and activities

that are commonly performed by

employers—such as setting wage rates,

paying wages, supervising, directing

and controlling the workers, providing

worker’s compensation—does not

indicate that the agricultural employer/

association may be a joint employer. On

the other hand, merely so providing in

the contract is not controlling if the

agricultural employer/association in fact

retains the power to, or actually

performs, such functions. As the

legislative history and the case law

make abundantly clear, it is the

economic reality of the relationship, not

contractual labels, that determine joint

employment. In order to allay any

confusion that may exist and to clarify

the effect of this regulation, language

has been added to the regulation to

reiterate that this regulation does not

create strict or per se liability and that

no single factor or set of factors is

determinative of joint employment. As

has been stated repeatedly, joint

employment can only be determined by

an examination of all the facts in a

particular case.

NCAE asserts that the effect of the

proposed rule will be the elimination of

the use of FLCs and consequent

disruption in the agricultural labor

market. This assertion fails to recognize

that the issue of joint employment

under MSPA does not govern whether

agricultural employers/associations will

have access to the services provided by

FLCs. No FLC will be precluded by

anything in the proposed regulation

from pursuing his/her business. Even

where the agricultural employer/

association is determined to be the

employer or a joint employer for

purposes of MSPA, the employer/

association may still use the FLC’s

services for all the tasks which FLCs

may perform under MSPA—recruiting,

soliciting, hiring, employing, furnishing,

or transporting any migrant or seasonal

agricultural worker. The sole effect of a

joint employment determination is,

where appropriate, to make an

agricultural employer/association

jointly responsible in the event the FLC

does not perform the employer

functions in a lawful manner.

The American Farm Bureau

Federation—a broad-based organization

similar to NCAE, which represents the

business and economic interests of more

than 4 million agricultural families—has

addressed many of the same concerns

raised by the NCAE comments but

without predicting the same dire

consequences for agricultural

employers/associations who accept

responsibility for FLCs’ actions. In its

Farm Bureau Grower’s Handbook: A

Compliance Guideline To Federal

Agricultural Labor Laws, April, 1991,

the Farm Bureau acknowledged that

applying the economic dependence

analysis to the typical agricultural

circumstance will ‘‘* * * probably be

enough for him [the grower] to be a joint

employer with the labor contractor.

* * *’’ In light of this potential

outcome, the Farm Bureau suggested

two alternative courses of action for its

members:

‘‘A grower has two choices. First, you may

try to distance yourself from your farm labor

contractor so that you will not be found to

be a joint employer if a lawsuit is brought

against him. Second, you may accept that the

way in which you want your operation to

work does not allow you to avoid being a

joint employer, and decide to plan ahead to

avoid legal liability. As for the first choice,

you should be aware that the trend of court

decisions, especially where workers covered

by [MSPA] are concerned, is to find that the
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11739

18Beliz at 1329–30; Haywood v. Barnes, 109

F.R.D. 568, 589 (E.D.N.C. 1986). Contra Aimable, at

440–441.

19Aimable at 441; Griffin and Brand at 238;

Monville v. Williams, 107 Lab. Cas. (CCH) P34,978,

at 45,252–253 (D. Md. 1987).

20Haywood at 589; cited in Barrientos v. Taylor,

917 F. Supp. 375, 383 (E.D.N.C. 1996).

21 Griffin & Brand at 237; Barrientos at 382;

Monville at 44,253; Leach v. Johnston, 812 F. Supp.

1198, 1207 (M.D. Fla. 1992); Antunez v. G & C

Farms, Inc., 126 Lab. Cas. (CCH) P33,015, at p.

46,174 (D.N.M. 1993).

22Haywood at 589 citing Griffin & Brand at 238.

See also Aimable at 441 (’’It is well-settled that

supervision is present whether orders are

communicated directly to the laborer or indirectly

through the contractor.’’); Beliz at 1328; Castillo at

189 n.17, 191–92.

growers are joint employers. Generally

speaking, this option is available only where

the workers are skilled and where the grower

takes a hands-off approach to supervising the

work and the employees. * * * On the other

hand, planning ahead to take responsibility

for complying with FLSA and [MSPA] does

not need to be an unreasonable burden.

Several of the steps that are required may be

taken by either the grower or the contractor.

* * * A plan to take all necessary steps to

comply with FLSA and [MSPA] is a better

defense against a lawsuit than trying to avoid

joint employment.’’

Id. at 49–50.

The Farm Bureau acknowledges that

joint employment in the typical

agricultural context is common but not

inevitable. As will be addressed in

greater detail below, the Farm Bureau

also lists factors used in the joint

employment analysis that closely track

those set out in the proposed rule and

which NCAE suggests are inappropriate.

b. Application of the Analytical Factors

in the Proposed Rule

NCAE suggests that under the

proposed rule a finding of ‘‘any control

or authority on the part of the grower’’

will result in a finding of economic

dependence and joint employment.

NCAE construes the proposed rule as

requiring that joint employment be

found where any of the delineated

factors are present. However, NCAE

misconstrues (or perhaps overlooks) the

express language of the proposed rule

which states that the factors ‘‘are

analytical tools to be used in

determining the ultimate question of

economic dependence. The factors are

not to be applied as a checklist. * * *

No one factor is critical to the analysis

* * * Rather, how the factors are

weighed depends upon all the facts and

circumstances.’’ NPRM at

500.20(h)(5)(iv).

NCAE asserts that the analytical

factors identified in the proposed rule

are distorted or inappropriate for

various reasons. This contention

appears to overlook the fact that each of

the proposed rule’s analytical factors is

drawn from the case law regarding

‘‘employ’’ and joint employment, as

discussed below.

The American Farm Bureau

Federation’s published guidance for its

members (1991 Handbook) expressly

recognizes a list of analytical factors

bearing on the joint employment

determination. While the Farm Bureau’s

factors do not identically track the

factors set out in the proposed rule, they

are notably similar and their recognition

by the Farm Bureau is at odds with

NCAE’s assertions about the propriety

and relevance of factors such as the

skills of workers, relative investment,

and permanency and exclusivity of the

work. The Farm Bureau’s Handbook

lists the relevant factors for determining

as joint employment as follows:

• Who owns the property where the

work is done?

• How much skill is needed to do the

job?

• Who has investment in land,

equipment and facilities?

• How permanent and exclusive is

the job?

• Who has the right to control the

work?

• Who supervises the work?

• Who sets the rates of pay or

methods of payment and employment

policies?

• Who has the right to hire, fire,

discipline, and otherwise affect the

workers’ employment?

• Who prepares the payroll and pays

the workers?

The NCAE’s comments also address

individual factors set forth in the

proposed rule, as follows:

i. Control/Supervision

Among the factors set forth in the

proposed rule, this factor tests the

putative employer’s power (directly or

indirectly, exercised or unexercised) to

control or supervise the workers or the

work performed. NCAE suggests that the

only relevant consideration under the

control factor should be the extent to

which the grower actually exercises

control and then only if the exercise of

control is substantial. The Department

disagrees with such a narrow view of

control in the determination of joint

employment.

Courts addressing this matter have

held that it is not the actual exercise of

direct control of the work but rather the

power or ability to do so that is relevant

to the joint employment inquiry. 18

Further, the courts have recognized that

the exercise of control can be

accomplished directly or indirectly

through others, such as by conveying

instructions through a FLC to the

workers. 19

As one court observed when

considering the control factor, ‘‘* * *

the right to control, not necessarily the

actual exercise of that control is

important. The absence of the need to

control should not be confused with the

absence of the right to control.’’ 20

Where the agricultural employer/

association retains any right to control

the workers or the work, this would

constitute control indicative of an

employment relationship. For instance,

where the agricultural employer/

association retains the right to direct

details of the work, this fact is

indicative of control and therefore

relevant to the joint employment

analysis.

Even the Aimable decision cited by

NCAE in support of its comments to the

proposed rule does not necessarily

support NCAE’s position. Having

observed that in this case the FLC

‘‘* * * exercised absolute, unfettered

and sole control over [the workers] and

their employment,’’ the Aimable court

simply never addressed any

circumstance in which the putative joint

employer retained the right to control

but did not exercise it. Aimable at 440.

The Department does believe that the

words ‘‘exercised or unexercised’’ in the

proposed regulation language are

redundant, inasmuch as the ‘‘power’’ to

control, direct, or supervise necessarily

implies the concept of unexercised

control. Therefore, to avoid confusion or

misunderstanding and to bring greater

clarity to the regulation, the words

‘‘exercised or unexercised’’ are not

included in the Final Rule.

The courts have determined that the

requisite control of the work may be

exercised directly or indirectly through

others. 21 Indirect control or supervision

may be accomplished through

instructions delivered to the FLC to be

communicated to the workers. As one

court said, ‘‘The fact that the defendant

often effected this supervision by

speaking to the crew leaders, who in

turn spoke to the farmworkers, rather

than speaking directly to the plaintiffs,

does not negate the obviously extensive

degree of on-the-job supervision that

existed. Reality can not be so easily

masked by transparent attempts to cover

over the truth with a deceptive label.’’ 22

It should be noted that indirect

control sufficient to indicate the

existence of an employment

relationship between a grower and a

FLC’s crewmembers would not be

established solely by contractual terms

through which the grower’s ultimate

standards or requirements for the FLC’s

performance are defined (e.g., the
11740 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

23Beliz at 1328; Castillo at 192; Griffin & Brand

at 237–38; Antunez at p 46,173; Haywood at 587.

24Beliz at 1328; Griffin & Brand at 238; AlvisoMedrano v. Harloff, 868 F. Supp. 1367, 1373 (M.D.

Fla. 1994); Haywood at 590–91; Monville at 45,253.

25Beliz at 1328; Castillo at 192; Alviso-Medrano

at 1373; Monville at 45,253; Maldonado at 487.

26See, e.g., Beliz at 1322, 1328; Maldonado at

487.

27See 29 CFR 500.20(h)(4)(ii)(C) The Power to

determine the pay rates or the methods of payment

of the workers; (D) The right, directly or indirectly,

to hire, fire, or modify the employment conditions

of the workers.

28Rutherford at 731; Antenor at 937–938 & n.15;

Beliz at 1328; Castillo at 192; Barrientos at 383;

Haywood at 587, 588–89; Monville at 45,253. But

see Aimable at 443.

29Ricketts v. Vann, 32 F.3d F1, F4 (rth Cir. 1994);

Lauritzen, Secretary of Labor v. Beliz at 1328; Fahs

at 44; Haywood at 589; Donovan v. Gillmor, 535 F.

Supp. 154, 162–63 (N.D. Ohio), appeal dismissed,

708 F.2d 723 (6th Cir. 1982).

30Ricketts at 74; Beliz at 1328; Castillo at 190;

Real at 755; Antunez at 46,174; Fahs at 44. But cf.

Aimable at 444.

grower’s specification of the size or

ripeness of the produce to be harvested,

or of the date for the FLC’s completion

of a job). Such stated performance

standards or objectives—which are

common in contracts for services in the

agricultural industry and in other

contexts—would not, in themselves,

constitute indirect control of the work

by the person for whose benefit the

services are to be performed (e.g., the

grower). However, the greater a grower’s

involvement in the assurance and

verification that the FLC is meeting or

will meet the contract’s ultimate

performance requirements, the greater

the likelihood that the grower would

demonstrate sufficient indirect control

to indicate an employment relationship

with the FLC’s crewmembers. Where the

grower not only specifies in the contract

the size or ripeness of the produce to be

harvested, but also appears in the field

to check on the details of the work and

communicates to the FLC any

deficiencies observed, the

circumstances must be closely

examined to determine if the grower is

demonstrating sufficient indirect control

of the workers to indicate there may be

an employment relationship with them.

The agricultural employer/association

may certainly take action during or after

the conclusion of the work to confirm

satisfaction of the contract’s ultimate

performance standards (including

appearing in the field and

communicating with the FLC about

general observations concerning

performance of the contract standards,

such as ripeness or size of the produce

harvested) without this action alone

being considered an indicium of joint

employment. The critical question to be

considered is not whether the

agricultural employer/association was

in the field or communicated with the

FLC, but rather what that presence in

the field and those communications

indicate about the nature and degree of

the agricultural employer/association’s

control over the work or the

employment. To avoid any possible

confusion in this regard, Factor (A) has

been amended to provide that a

reasonable degree of contract

performance oversight and coordination

with third parties such as packing

houses and processors is permissible.

ii. Power to Hire, Fire, Modify

Employment Conditions or Determine

Pay Rates or Methods of Payment

As with the control factor, NCAE

argues that it should be only the actual

exercise, not the power to effect, these

activities that should be considered.

NCAE recognizes that these important

employer functions are significant in the

determination of joint employment. A

putative employer’s direct or indirect

exercise of the power to hire, fire or

modify employment conditions, set pay

rates or method of payment is obviously

relevant to employer status, as courts

have stated. 23 For example, a putative

employer may expressly agree on a rate

of pay for the workers in his/her

contract with an FLC24 or may

effectively determine the workers’

compensation rates through the amount

of the payments to the FLC. 25

Equally relevant is the putative

employer’s power or authority to

exercise these functions should it be in

his/her best interest to do so. Courts

have recognized that agricultural

employers retain the ability to exercise

significant control over the employment

but may never find the need to exercise

that power. 26 The retention of power is

revealing of the economic dependence

of the workers on the putative employer

just as is the actual exercise of power.

The current regulation, which NCAE

urges the Department to retain, includes

the same factor bearing on employment

that NCAE asserts is objectionable. 27

This factor is merely preserved in the

amended rule.

iii. Provision of Housing,

Transportation, Tools and Equipment,

or Other Materials Required for the Job

NCAE asserts that this factor should

not be considered in a joint employment

analysis. Many courts have recognized

the appropriateness of identifying the

person or entity which provides the

housing, transportation, tools,

equipment, machinery and other

resources related to the employment. 28

The Department—along with the

courts—considers this factor to be

relevant.

It is the Department’s view that this

factor is sufficiently similar to the

consideration of employer-provided

services or benefits in factor (H) of the

NPRM that the factors should be

consolidated in the Final Rule. A fuller

discussion of the relevance of these facts

is found in part vii below, which deals

with new combined factor (G) of the

Final Rule.

iv. Degree of Permanency of the

Relationship

NCAE contends that this factor should

not be considered because it was

rejected by the court in Aimable.

However, the Department recognizes

that, despite Aimable, the great weight

of the case law supports consideration

of the degree of permanency and

exclusivity in the relationship between

the workers and the putative employer

in the context of the agricultural

operation in question. 29 The duration of

that operation necessarily affects the

duration or permanency of the

relationship. Where an FLC and the

workers are engaged for the duration of

the operation and are obligated to work

only for or be available to the

agricultural employer/association at his/

her discretion during that period, that

information bears directly on the

question of the workers’ economic

dependence. Other courts have found

this factor relevant and the Department

believes that duration of the

relationship should be one of the factors

considered in determining joint

employment.

v. Unskilled Work

NCAE suggests that this factor is

designed to predetermine a finding of

joint employment, apparently based on

the assumption that nearly all

agricultural work involves repetitive,

rote tasks requiring little skill or training

even though NCAE also acknowledges

that many agricultural jobs require

considerable skill and experience. The

Department recognizes that the worker’s

skill—like each of the other factors

identified in the case law and this

regulation—is only one of several

factors which are to be considered in

making the ultimate determination as to

the worker’s economic dependence. In

almost all cases, the courts have

considered the worker’s degree of skill

to be a relevant and probative factor in

the determination of such

dependence. 30 In common experience

in the agricultural industry and other

contexts, there is a reasonable

correlation between the worker’s degree

of skill and the marketability and value

of his/her services. In the free market
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11741

31Ricketts at 74; Beliz at 1328; Castillo at 190;

Real at 755; Antunez at 46,174; Fahs at 44. But cf.

Aimable at 444.

32Rutherford Food at 726, 729–730; Aimable at

444; Griffin & Brand at 237–238; Beliz at 1328;

Castillo at 192; Fahs at 42–43.

33Rutherford Food at 726, 729–730; Aimable at

444; Griffin & Brand at 237–238; Beliz at 1328;

Castillo at 192; Fahs at 42–43.

34Antenor at 937; Griffin & Brand at 237; Fahs at

42; Beliz at 1328.

place, an unskilled task which may

easily be learned and performed by

almost any worker is a task for which

many workers (both trained and

untrained) can realistically compete,

and is also a task for which the

competing workers would not be able to

demand or expect high wages. The

lower the worker’s skill level, the lower

the value and marketability of his/her

services, and the greater the likelihood

of his/her economic dependence on the

person utilizing those services.

Conversely, the higher the worker’s skill

level, the greater the value and

marketability of his/her services in the

market place and, consequently, the

lesser the likelihood that he/she would

be economically dependent on any

particular person who utilizes his/her

services.

The Department concludes that, in

light of the great weight of the case law,

the factor of the worker’s degree of skill

is an appropriate factor for

consideration in the determination of

economic dependence; the regulation

therefore identifies this factor as one of

several to be considered. 31

vi. Activities of the Workers Integral to

Overall Business Operation and Work

Performed on Premises Owned or

Controlled by Putative Employer

NCAE asserts that these two factors

are included in the proposed rule to

assure that the agricultural employer/

association always will be found to be

a joint employer. NCAE cites no

authority for rejecting these as relevant

factors for determining joint

employment. In fact, no case has

rejected these factors and they are

invariably included among the factors

considered by courts. 32

This MSPA regulation is an

embodiment and distillation of the case

law, which consistently demonstrates

that many factors—including the

worker’s performance of a function

integral to the putative employer’s

operation, and the location of the work

on the putative employer’s premises—

are relevant and probative factors in the

determination of the ultimate question

of the worker’s economic dependence. 33

The exclusion of one or more of these

factors would not only be an

unjustifiable distortion of the courts’

decisions, but would also result in an

incomplete analysis of the economic

realities upon which the ultimate issue

of an employment relationship is based.

In the agricultural industry, as in

other parts of the free market place,

there is a logical and appropriate

correlation between the ‘‘centrality’’ of a

function in a business operation and the

certainty of the business’ performance of

that function through the use of

whatever resources or methods are

necessary, including the use of labor. In

other words, where a function is a

central or core part of the business (i.e.,

important enough to be ‘‘integral’’ to the

business; often performed on the

business’ premises), common

experience shows that that business

would be virtually certain to assure that

the function is performed, and would

obtain the services of whatever workers

are needed for that function. The

workers so engaged can reasonably

anticipate that the work will be

available for so long as the function in

question must be performed. The

Eleventh Circuit, recognizing the

importance of the putative employer’s

providing the place where the work is

performed, stated in Antenor: ‘‘[t]his

element is probative of jointemployment status for the obvious

reason that without the land, the

workers might not have work, and

because the business that owns or

controls the worksite will likely be able

to prevent labor law violations, even if

it delegates hiring and supervisory

responsibilities to labor contractors.’’ 88

F.3d at 936–937. The court applied a

similar rationale in holding that ‘‘a

worker who performs a routine task that

is a normal and integral phase of the

grower’s production is likely to be

dependent on the grower’s overall

production process.’’ The workers’

reliance upon a particular business as a

source or place of work (and,

consequently, a source of income in the

form of wages for services) can

appropriately be considered in the

determination of an employment

relationship.

Conversely, where the work is not

performed on the putative employer’s

premises or is not integral to the

putative employer’s business operation,

these facts would indicate that the

existence of a joint employment

relationship is somewhat less likely.

After carefully reviewing the case law

and considering the NCAE comment,

the Department has concluded that the

analysis of the workers’ economic

dependency on the putative employer

necessarily includes the consideration

of these two factors bearing on the

‘‘centrality’’ of the function in the

putative employer’s operation.

However, the Department reiterates that

neither of these factors (or any other

factor) is controlling in the analysis.

vii. Putative Employer Provides

Services, Materials or Functions

Commonly Performed by an Employer

As stated in the discussion under part

iii above, factor (C) of the NPRM has

been combined with factor (H) of the

NPRM to create a new factor (G) in the

Final Rule because the substance of the

two NPRM factors is similar. Both

NPRM factors focused on services, tools,

equipment, and materials which are

commonly provided or performed by

employers. Factor (C) dealt with

transportation and housing, which are

common indices of employment for

transient workers or those who have no

other means of transportation to work.

Factor (H) dealt with services and

benefits such as providing workers’

compensation insurance and handling

payroll, which are commonly performed

by employers.

In addition to the issues raised by the

American Pulpwood Association and

others, discussed above, NCAE suggests

that consideration of this factor is

inappropriate in that a putative

employer may take such actions or

provide materials or services because

he/she handle them better or more

economically than can the FLC. The

Department recognizes that an

agricultural employer/association may

be more skilled, efficient, or better

capitalized than the FLC and that this

may be a reason for performance of

various ‘‘employer’’ functions. However,

the Department does not consider

efficiency, motive, or capitalization to

be a reason to negate the relevance of

this factor in assessing joint

employment. The courts have

considered these facts to be relevant and

probative in the joint employment

analysis.

Where a putative employer provides

materials or services, or undertakes

functions normally performed by an

employer (such as providing workers’

compensation, paying FICA taxes,

transporting or housing workers,

providing the tools and equipment

necessary to the work), such behavior

indicates that it is in his/her interest to

perform such functions that are

commonly performed by employers

rather than rely on the FLC. 34 Further,

workers who use the services, materials

or functions are in a very tangible way

economically dependent on the entity
11742 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

35Antenor at 936 (‘‘[T]he farmworkers were

dependent on the growers to obtain financial

compensation for job-related injuries * * * They

relied on [the growers] to see that the social security

payments were made as well.’)

performing these functions. 35 Thus, the

performance of these ‘‘employer’’

functions by a putative employer is both

an objective manifestation of employer

status and strong evidence of the

workers’ economic dependence upon

him/her.

The Final Rule contains some

modifications made in response to these

commenter’s concerns. The word

‘‘normally’’ in the NPRM has been

changed to ‘‘commonly’’ as a more

accurate and precise word in this

context. Further, the NPRM has been

amended to consider the amount of the

investment in tools and equipment

when considering these items in the

joint employment analysis.

The Department recognizes that

ownership of housing is not

determinative. To the extent that an

agricultural employer/association

relinquishes all control of housing it

owns to a third party, the mere

ownership of the housing by the

agricultural employer/association would

not in itself be a consideration in the

joint employment analysis.

The Department also recognizes that

benefits, services or functions

performed by an agricultural employer/

association may directly benefit the

workers, and that some persons might

argue that these matters should not be

considered in the joint employment

analysis to avert the unintended and

undesirable consequence that

agricultural employers/associations

would be dissuaded from providing

these benefits. While workers may be

benefited if an agricultural employer/

association provides workers’

compensation, withholds and pays

employment taxes, or provides housing

or transportation, the benefit realized by

the workers does not negate, but rather

reinforces the relevance of the provision

of these services in determining the

economic dependence of the workers.

As set out above, the courts have held

these facts to be probative of joint

employment.

Nonetheless, it is not the

Department’s intention nor desire to

create unnecessary disincentives for

agricultural employers/associations to

provide employment related benefits to

agricultural workers or more closely

oversee farm labor contractor activities

to ensure compliance with legal

obligations. Therefore, the MSPA

regulation on the assessment of civil

money penalties, 29 CFR 500.143 is

amended to include as an example of

‘‘good faith efforts to comply with the

Act’’ an agricultural employer/

association providing benefits to

workers or taking reasonable measures

to ensure FLC compliance with legal

obligations. These reasonable measures

will be considered by the Department as

a mitigating factor in assessing any civil

money penalties resulting from

violations which arise from the joint

employment relationship.

The Department further recognizes

that an agricultural employer/

association may be harmed by an FLC

who violates his/her contract with the

agricultural employer/association for

the provision of labor and, in so doing,

fails to meet an employment obligation

to the workers. If an agricultural

employer/association is found to be a

joint employer, and therefore jointly

liable with the FLC for employment

obligations to the workers (e.g., payment

of wages), the agricultural employer/

association would be required to ‘‘make

good’’ on such obligations where the

FLC failed to do so. The joint and

several liability inherent in the concept

of joint employment requires this result.

However, nothing in the case law on

joint employment or in this MSPA

regulation should be construed as in any

way prejudicing any rights the

agricultural employer/association may

have against the FLC to recover for

damages resulting from the FLC’s breach

of the contract to provide labor to the

agricultural employer/association. Thus,

if the FLC in that contract agreed to pay

the wages of the workers but failed to

do so, the agricultural employer/

association found to be a joint employer

may well have legal recourse against the

FLC for any money the agricultural

employer/association is required to pay

to the workers.

Some employer commenters assert

that certain activities are undertaken by

the agricultural employer/association

not because of an employment

relationship with the workers or

because it can handle the activity more

efficiently or economically than the

FLC, but because the agricultural

employer/association is obligated under

some other law to engage in or refrain

from engaging in certain activity. One

example is the landowner’s obligation

under Environmental Protection Agency

(EPA) regulations to prevent workers

from reentering fields that were recently

sprayed with pesticides. The

Department takes the view that where

an action or inaction is taken under

compulsion of a legal requirement

which is unrelated to an employment

relationship, such action or inaction is

not to be considered in the

determination of whether an

employment relationship exists for

purposes of MSPA. Thus, while a

grower’s action in barring workers from

a particular field at a particular time

might be viewed as an exercise of the

grower’s control over the workers’ hours

and places of work (indicative of an

employment relationship), the

Department would not take this activity

into account in the employment

relationship analysis where the grower’s

action is only that required to fulfill his/

her legal obligations under EPA

requirements based on his/her status as

a landowner and not on any status as an

employer.

c. Administrative Procedure Act

NCAE and other commenters assert

that the Department has failed to

demonstrate a compelling rationale for

the proposed rule, i.e., that the

Department presented no ‘‘data’’ to

support the proposal and, therefore, the

rule is arbitrary and capricious. The

proposed regulation is intended by the

Department to clarify the current

regulation, to provide more complete

and accurate information to affected

parties (farm labor contractors,

agricultural employers/associations, and

agricultural workers), and to make the

regulation more useful to the public.

NCAE asserts that the rationale is

insufficient because the proposed

regulation is longer rather than shorter

than the current regulation and because,

in NCAE’s opinion, the regulated

community is not confused and,

therefore, needs no clarification.

Further, these commenters suggest that

the proposed rule is fatally flawed

because in their opinion courts will not

grant deference to the new rule because

it is at odds with the current rule

(promulgated shortly after MSPA’s

enactment) and with the Aimable

decision. The Department has

considered these concerns and believes

them to be without foundation.

The current regulation is not being

repudiated by the proposed rule. Rather,

the substance of the current regulation

is being reorganized and restated for

purposes of clarity, and additional

guidance is being offered to the

regulated community. In the 13 years

since the enactment of MSPA, it has

become apparent that the regulation

needs to be updated to reflect the

Department’s enforcement experience

and a substantial body of court

decisions construing joint employment.

Enforcement experience and judicial

decisions have highlighted the need for

clarification and elaboration of the

proper analysis of joint employment.

Since the current regulation was

promulgated in 1983, it has become
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11743

36Antenor, supra.

37Rutherford Food at 730; Lauritzen at 1538;

Pilgrim Equipment at 1311.

38 ‘‘U.S. Farmworkers in the Post-IRCA Period:

Based on Data from the National Agricultural

Workers Survey,’’ Office of the Assistant Secretary

for Policy, March, 1993, at 16; ‘‘The Report of the

Commission on Agricultural Workers’’, Commission

on Agricultural Workers, November, 1992, at

xxvii.(‘‘In recent years FLCs increasingly have filled

the role of matching seasonal workers with

jobs. * * * Workers employed by FLCs generally

receive lower wages and are employed under

working conditions inferior to those offered to

farmworkers hired by * * * agricultural

employers.’’).

39 Ibid.

40U.S. v. Rosenwasser, 323 U.S. 360, 362 (1945).

41House Comm. Rept. at 4553.

clear to the Department that the

regulation does not offer complete

guidance on joint employment and may

lead to misunderstanding and

confusion. The regulation has been

misconstrued in as much as the five

factors delineated in 500.20(h)(4)(ii)(A)–

(E) have sometimes been viewed as an

exhaustive list of factors that the

Department believes are probative of

joint employment. This has never been

the position of the Department, as

shown by the express qualification in

the existing regulation, which states that

the determination of joint employment

is not limited to the regulation’s list of

factors. 29 CFR 500.20(h)(4)(ii).

However, some of the regulated

community and some courts have taken

the position that these are ‘‘ ‘the five

regulatory factors’ ’’ (emphasis added),

treating them as an exclusive or

exhaustive list. Aimable at 439.

The five factors identified in the

current regulation continue to be an

essential part of the consideration of

joint employment. The proposed rule is

intended to place them in the proper

context as part of the economic

dependence analysis. The five factors,

consolidated into two, apply within the

broader context of the economic

dependence analysis and the more

complete list of factors found relevant

by the courts and by the Department in

conducting this analysis.

The proposed regulation is thus a

more complete and accurate description

of the appropriate joint employment

analysis than is the current regulation.

The proposed rule is intended to give

better guidance to the regulated

community about the purposes to be

served by the MSPA joint employment

principles and provide additional

guidance about the ultimate question to

be resolved in both the independent

contractor and joint employer analysis—

i.e., economic dependence. The

Department has set out a nonexclusive

list of factors which it believes will help

provide the proper framework for

deciding whether or not a joint

employment relationship (or

independent contractor status) exists;

the proposed rule preserves the current

rule’s express notice that factors in

addition to those identified in the

regulation may be appropriate for

consideration. Through the proposed

rule, the regulated community is being

provided with more complete guidance,

the courts will have the benefit of the

Department’s complete views on these

questions, and the Department’s

enforcement of MSPA will be made

more efficient and effective.

The need for clarification has become

apparent to the Department. Some

recent court decisions—such as

Aimable—have applied the current

regulation as a checklist, or as a rigid

formula in which factors simply are

entered in two columns with little

analysis beyond a comparison of the

totals at the bottom of the columns ‘‘for’’

and ‘‘against’’ joint employment. The

most recent case to consider the joint

employment in agriculture issue 36 has

instructed that this analytical method is

not what was intended by the courts in

the seminal cases 37 or by Congress in its

express adoption of the FLSA’s broad

concepts of ‘‘employ’’ and joint

employment. The proposed rule is

intended to assist in focusing on and

applying the flexible multifactor

analysis which is required.

Further, the Department’s

enforcement experience indicates a

need to better articulate and apply

Congress’s intentions for MSPA joint

employment. Studies have shown that

the use of farm labor contractors is

increasing, thereby exacerbating the

harmful effects which FLCs who operate

in violation of the laws have in this

labor market. 38 These studies have

shown that in comparison with growers,

farm labor contractors pay lower wages

and provide fewer benefits. 39 To the

extent that farmworkers, who are

entitled to the protections of MSPA, are

denied their rights because of

misunderstanding of or incorrect

application of joint employment

principles under the current regulation,

it is the Department’s belief that the

proposed regulation will enable more

agricultural employers/associations to

understand and fulfill their obligations

if, as the American Farm Bureau

Federation’s Grower Handbook says,

they will ‘‘accept that the way you want

your operation to work does not allow

you to avoid being a joint employer.’’

5. AFL–CIO Comment

The AFL–CIO commented in support

of the proposed rule as being fully

consistent with the statutory language,

its legislative history and its intended

purposes. Further, the AFL–CIO

expresses the view that the proposed

rule is likely to better inform the

regulated community about its

obligations under the Act and thereby

promote greater compliance among

employers, thus reducing government

enforcement expense.

The AFL–CIO found support for its

views in the definition of ‘‘employ’’

under the FLSA and the Supreme

Court’s observation that ‘‘a broader or

more comprehensive coverage of

employee within the stated categories

would be difficult to frame.’’ 40 The

AFL–CIO asserts that as a result of the

broad coverage under ‘‘employ,’’ it has

long been settled that the traditional

common law ‘‘control’’ tests and

principles do not solely determine

whether or not a worker is an

independent contractor or employee, or

whether or not he/she is employed by

one or more employers.

The AFL–CIO further emphasizes that

Congress intended to capture the broad

scope of the FLSA coverage when it

enacted MSPA. The AFL–CIO cites the

legislative history which shows that

joint employment was characterized as

the ‘‘central foundation’’ of the Act and

should not be decided by common law

principles.

The AFL–CIO agrees with the courts

and the Department that the proper

analysis in determining employment

status is economic dependency based on

consideration of the totality of the

circumstances, not a mechanically

applied checklist of factors. Citing the

language in the Committee Report as

evidence of the approach which

Congress intended (‘‘* * * the absence

of evidence on any one or more of the

criteria listed does not preclude a

finding that an agricultural association

or agricultural employer was not a joint

employer along with the crew

leader.’’ 41), the AFL–CIO contends that

the proposed rule ‘‘reflects fairly the

factors which Congress intended to aid

in evaluating whether workers are

individual contractors or employees’’

and who among the parties are

employers. The AFL–CIO also suggests

that the Department consider including

a brief statement explaining the

significance of the factors delineated in

the NPRM as a way of bringing greater

clarity to the regulations.

The AFL–CIO suggests that the

regulation make clear that sufficient

control on the part of a putative

employer is demonstrated if the putative

employer retains the right to establish

general parameters within which the

work is to occur. They assert that a labor
11744 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

42House Comm. Rept. at 4549.

43MFJP also cites Monville at 45,252 (’’Indeed, the

elimination of this shielding effect of recruitercontractors was one consideration leading to the

reformulation and broadening of the definition of

the term ’employ’ when the [MSPA] was enacted to

replace the Farm Labor Contractor Registration Act

of 1963.’’)

44This data is based on information from DOL

registrations of FLCs.

45See Antenor at 938; but see Aimable at 443

(significant investment in equipment and facilities

on the part of both the FLC and the grower does

not indicate that the workers are jointly employed

by both entities).

intermediary may make all the

implementing decisions within those

broad parameters but the person

establishing those parameters retains

sufficient control to be deemed a joint

employer. In their view, sufficient

control would be established if the

putative employer retains the right to

dictate the ‘‘place, pace and timing’’ of

the harvest. A grower places his/her

interests in the place, pace and timing

of the harvest to maximize profit given

market price and other factors in

contrast with the FLC and piece-rate

workers, whose economic interests are

to pick as much and as fast as possible

to maximize earnings. The grower

thereby may make the worker (and the

labor contractor) subservient to—and

dependent on—the grower’s economic

goal of maximizing profit by delaying

the harvest or by picking only the best

quality of fruit.

Because the proposed regulation is

intended to address a broad range of

circumstances, the Department has

concluded that any attempt to delineate

precisely how each factor is to be

applied as suggested by the AFL–CIO in

this regard may well have the effect of

unduly limiting the factor’s application

to an inappropriately narrow range of

factual circumstances. As the proposed

rule makes clear, the statement of the

factors is intended to offer guidance and

not to be exhaustive, either in the

identification of relevant factors or in

their application to specific factual

circumstances. In appropriate factual

circumstances, it may well be

appropriate to conclude that the right to

determine the place, pace and timing of

the work is sufficient to establish

control under the joint employer

analysis.

6. Migrant Farmworker Justice Project

The Migrant Farmworker Justice

Project (MFJP) submitted comments on

behalf of itself and 33 others, generally

supporting the proposed rule.

Specifically, MFJP asserts that the

proposed rule is necessary to clarify the

current regulation to more fully and

completely conform to case law cited in

the MSPA legislative history and the

judicial rulings construing the Act.

Further, MFJP contends that the current

regulation, particularly the listed

factors, has excluded other relevant

factors, thereby misleading Wage and

Hour compliance investigators and the

affected community about the

obligations under the Act.

MFJP also contends that there is

ample factual support for the necessity

to further refine the joint employment

definition to serve the legislative

purpose in enacting MSPA in 1983.

MFJP asserts that MSPA was intended

to shift responsibility to growers from

FLCs for many of the important

protections under MSPA’s predecessor

statute, the Farm Labor Contractor

Registration Act (FLCRA). FLCRA did

not include the joint employer concept

but rather placed responsibility on farm

labor contractors. MFJP asserts that the

Department’s incomplete definition of

joint employment in the current

regulation has undermined that

essential Congressional purpose

underlying the enactment of MSPA.

In support of this assertion, MFJP

cites the legislative history of MSPA in

which Congress found that the FLCRA

had ‘‘failed to reverse the historical

pattern of abuse and exploitation of

migrant and seasonal farm workers’’ and

that ‘‘a completely new approach must

be advanced.’’ 42 As stated by an original

co-sponsor of MSPA, this completely

new approach involved placing

responsibility for compliance with

certain provisions on agricultural

employers as well as FLCs:

The [Act] corrects the key weakness of

the FLCRA, which held only the farm

labor contractor responsible for such

abuses and shielded the employer

unless he fell within the narrow

definition of ‘‘farm labor contractor’’

under that Act.

Remarks of Rep. Ford, 128 Cong. Rec.

10456 (daily ed. December 20, 1982).43

In addition, MFJP contends that FLCs

have proven to be difficult both to

regulate and, when found to be in

violation, to effectively bring to account.

According to MFJP, many FLCs are so

devoid of resources that they are unable

to satisfy civil money penalty

assessments or court judgments

awarding monetary damages to

aggrieved farmworkers. Additionally,

with such a transient population

(approximately 20% of the FLC

population leaves the industry every

year and is replaced by new entrants),44

it is difficult to effectively regulate labor

standards if only FLCs are deemed

responsible for compliance.

MFJP suggests that the proposed joint

employment analysis needs further

clarification in order to reiterate that

joint employment is indicated when two

or more employers share responsibility

for all or some of the factors set out in

the proposed rule. According to MFJP,

such shared responsibility tends to

indicate that the workers are

economically dependent on two

employers, such as when a FLC

provides the clippers needed to harvest

citrus and the agricultural employer/

association provides the equipment for

hauling the fruit and the field sanitation

units (See proposed 500.20(h)(5)(iv)(C)).

It also tends to demonstrate that the

putative employers are not completely

disassociated with respect to the

employment of an employee. The

Department agrees with this point and

thus the regulatory language at

500.20(h)(5) will be changed to clarify

that shared responsibility is an

indication of joint employment. 45

7. United Farm Workers, AFL–CIO,

Texas Division

The United Farm Workers, AFL-CIO,

Texas Division (UFW-Texas) submitted

comments on behalf of itself and 15

other organizations. The UFW-Texas

comments were generally supportive of

the proposed rule and many of its

statements were consistent with and

reflected in the AFL-CIO and MFJP

comments. However, UFW-Texas also

suggests that the factors set out in the

proposed rule should be further

explained and reformulated to capture

the full scope of the cases applying the

factors. For example, the proposed

factor at § 500.20(h)(4)(iii) states in

relevant part: ‘‘[t]he putative employee’s

investment in equipment or materials

required for the task * * *’’. UFWTexas suggests restating the factor in the

following language (modifications

underlined): ‘‘[t]he putative employee’s

investment in substantial equipment,

materials, and large capital expenditures

as compared to that of the putative

employer.’’ In the alternative, the UFWTexas proposes that the factors be

amended to include citations to cases in

which the factors have been applied.

The Department believes the

suggested changes are unnecessary. As

stated in the proposed rule, the

regulation is intended to summarize the

factors applied by the courts and is not

intended to be an exhaustive statement

of the relevant factors and their

applicability in every situation. Under

this rule, it would still be necessary for

enforcement personnel and courts

examining joint employment to refer to

the guidance offered by the courts that

have applied the factors in joint

employment cases. Nothing the
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11745

46Compare: Antenor, supra, with Aimable, supra.

47See Nationwide Mut. Ins. Co. v. Darden, 503

U.S. 318, 326 (1992); Rutherford Food at 728–729

(1947); Lauritzen at 1534.

48See Lauritzen at 1534, 1538; Beliz at 1327; Real

at 754.

Department has done in the proposed

rule negates this additional level of

analysis.

8. United States Department of

Agriculture

The United States Department of

Agriculture (USDA) submitted a number

of comments concerning the NPRM.

Many of USDA’s comments were similar

to those submitted by agricultural

interests and are fully addressed above.

USDA made a number of observations

regarding FLCs and their relationships

with agricultural employers/

associations, and offered several

comments concerning the regulation in

general. USDA suggested that an

amended MSPA joint employment

regulation is unnecessary and should

not be issued. Further, USDA suggested

that should a revised joint employment

regulation be deemed necessary or

advisable, it should be issued as a

regulation applicable to all industries

under the Fair Labor Standards Act.

After careful consideration, the

Department concluded that these USDA

suggestions could not be

accommodated, since joint employment

is already defined in the MSPA

regulations and that definition is in

need of revision.

USDA also offered specific comments

on the NPRM, all of which have been

fully considered by the Department.

Some of the USDA suggestions have

been adopted while others have been

rejected, as discussed below.

USDA, like the comments submitted

by NCAE and discussed in detail above,

suggested that the NPRM test for

economic dependence through an

analysis of the listed factors would

create a strict liability standard under

MSPA and is therefore contrary to the

case law and legislative intent. To

support this position, USDA offered

hypothetical factual patterns which it

contended would illustrate strict

liability in common agricultural

settings. USDA further commented that

the Department should focus its

enforcement activities on the violating

farm labor contractors rather than upon

agricultural employers/associations who

may or may not have any knowledge or

control over contractors’ activities.

USDA also suggested that the

Department should delete the NPRM

factors concerning the unskilled nature

of the work, work that is integral to the

overall business operation of the

agricultural employer/association, and

work performed on the premises of the

agricultural employer/association

because these factors are indicative of

an independent contractor relationship

rather than joint employment. The

Department has determined—based on a

careful review of the legislative history

and case law—that these concerns have

been appropriately taken into account,

as discussed earlier in this preamble

with regard to other commenters. In

addition, USDA contended that an

economic analysis should be completed

pursuant to Executive Order 12866. For

the reasons stated in the Executive

Order section of this preamble, the

Department has concluded that such an

analysis is not required.

USDA offered a number of specific

recommendations to amend or clarify

the NPRM that have been adopted in the

Final Rule. The Rule expressly states

that the test for joint employment is not

a strict liability or per se rule. In the

Preamble, examples have been included

of hypothetical factual situations

involving agricultural employers/

associations and farm labor contractors

in which joint employment is unlikely

to be found. The NPRM Factor (A)—

concerning the power to control, direct,

or supervise the workers or the work—

has been amended to clearly state that

a reasonable exercise of contract

performance oversight by the putative

employer would not be sufficient to

constitute ‘‘control’’ for purposes of

joint employment. The NPRM Factor

(I)—concerning ‘‘other relevant

factors’’—has been deleted as being

unnecessary and redundant; the

regulation’s language preceding the list

of factors makes it clear that the factors

are not an exhaustive list of all relevant

considerations in the joint employment

analysis. The MSPA regulation on the

assessment of civil money penalties (29

CFR 500.143(b)(4)) is being clarified

through the addition of a parenthetical

illustrating that agricultural employers/

associations who take reasonable

measures to gain farm labor contractor

compliance or who offer employmentrelated benefits to agricultural worker

will have these good faith activities

considered as mitigating factors in any

penalty assessment resulting from a

finding of joint employment. The

Preamble also explains that where

agricultural employers/associations

undertake responsibilities solely as a

result of a legal obligation unrelated to

an employment relationship, those

undertakings will not be considered in

the joint employment analysis.

IV. Summary and Discussion of Final

Rule

A. Joint Employment Standard Under

MSPA

The Department is amending the

MSPA regulation defining the

employment and joint employment

relationship in agriculture. Having

reviewed this regulation in accordance

with Executive Order 12866, the

Department recognized the need for a

clearer and more complete regulation.

The Department announced its

intention to update and clarify this

MSPA regulation in the regulatory

agendas published in the Federal

Register (60 FR 23546 (May 8, 1995); 60

FR 59614 (November 28, 1995)).

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 legal standards under MSPA and

the Fair Labor Standards Act, which

contain the identical statutory

standard.46 It is the Department’s view

that the MSPA ‘‘joint employment’’

regulation will be strengthened by

focusing more closely on the ultimate

test for employment and joint

employment as established by the

federal courts, i.e., ‘‘economic

dependence,’’ and by further clarifying

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.

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.47 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(s)

and the putative employer(s) to

determine upon whom the employee is

economically dependent.48 The

determination of economic dependence
11746 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

49See Rutherford Food at 727, 729; Griffin &

Brand at 237.

50Rutherford Food at 727, 729; Griffin & Brand at

237.

51E.g., Falk v. Brennan, 414 U.S. 190, 195 (1973);

Bonnette v. California Health and Welfare Agency,

704 F.2d 1465, 1469 (9th cir. 1983); Griffin & Brand

at 237–238.

52House Comm. Rept. at 6–7.

53 128 Cong. Rec. H26008 (Sept. 1982).

54House Comm. Rept. at 7

is based upon the ‘‘economic reality’’ 49

of all the circumstances and not upon

isolated factors or contractual labels.50

Since the ‘‘economic reality’’ test was

first delineated by the Supreme Court in

Rutherford Food, the courts have

consistently applied a multi-factor

analysis as a means of gauging whether

the worker is economically dependent

on the putative employer; under this

analysis, no single factor is

determinative.

The joint employment doctrine,

which has long been recognized under

FLSA case law,51 is defined by the FLSA

regulation to mean a condition in which

‘‘[a] single individual may stand in the

relation of an employee to two or more

employers at the same time’’, such a

determination depending upon ‘‘all the

facts in the particular case.’’ (29 CFR

791.2(a)).

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.’’ 52 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.’’ 53 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.54

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.

The current MSPA regulation,

promulgated in 1983, sets out a nonexclusive list of factors which are

appropriately 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

a 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 being

misinterpreted but is also being applied

so as to frustrate the express intention

of Congress in enacting MSPA.

B. The Final 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

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

regulation also addresses the crucial,

initial issue of whether a farm labor

contractor is a bona fide independent

contractor or an employee of an

agricultural association/employer.

Where an FLC is actually an employee

of the agricultural employer/association,

any worker providing services through

the FLC is necessarily also an employee

of the FLC’s employer.

The Final Rule more clearly

enunciates the proper analysis 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

provides needed guidance on ‘‘control,’’

clarifying that the appropriate inquiry is

as to a 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 is 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.

C. Changes Made in the NPRM

Regulatory Text

Section 500.20(h)(5) in the NPRM has

been changed to clarify that shared

responsibility on the parts of putative

employers is an indication of joint

employment.

Section 500.20(h)(5)(iv) in the NPRM

has been changed to clarify that this

regulation is not intended to create a

strict liability or per se standard of joint

employment liability.

Section 500.20(h)(5)(iv)(A) in the

NPRM is changed to delete the phrase

‘‘and may be either exercised or

unexercised.’’ The phrase ‘‘and a

reasonable degree of oversight of

contract performance and coordination

with third parties’’ has been added to

this factor.

Section 500.20(h)(5)(iv)(C) in the

NPRM has been deleted and its contents

have been incorporated into new factor

(G).

Section 500.20(h)(5)(iv)(G) (factor (H)

in the NPRM) has been amended to

change ‘‘normally’’ to ‘‘commonly’’ and

‘‘maintaining’’ to ‘‘preparing and/or

making.’’ Factor (C) in the NPRM has

been incorporated in this factor along

with the phrase ‘‘taking into account the

amount of the investment.’’

Section 500.20(h)(5)(iv)(I) in the

NPRM has been eliminated.

Section 500.143(b)(4) of the current

regulation (29 CFR 500.143(b)(4)) has

been amended to add examples of good

faith efforts to comply with the Act by

agricultural employers/associations.

V. Executive Order 12866/Section 202

of the Unfunded Mandates Reform Act

of 1995/Small Business Regulatory

Enforcement Fairness Act 1995

The Final Rule is not ‘‘economically

significant’’ within the meaning of

Executive Order 12866, is not a major

rule within the meaning of Section

804(2) of the Small Business Regulatory

Enforcement Fairness Act, and does not

require a section 202 statement under

the Unfunded Mandates Reform Act of

1995. This rule simply amends the

MSPA regulations to clarify the

concepts of employ, employer,

employee, and joint employment, which

are already contained in the current
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations 11747

rule. The need for clarification of the

current rule is clear, given that the

factors listed in the rule are less

complete than those applied by the

courts and, therefore, require further

explanation. Although the Final Rule is

simply a clarification of existing

concepts, the rule is designed to refocus

the analysis of the employment and

joint employment doctrines. Therefore,

this rule is being treated as a

‘‘significant regulatory action’’ within

the meaning of section 3(f)(4) of

Executive Order 12866. However, no

economic analysis is required because

the rule will not have an annual effect

on the economy of $100 million or more

or adversely affect in a material way the

economy, a sector of the economy,

productivity, competition, jobs, the

environment, public health or safety, or

State, local, or tribal governments or

communities. Furthermore, even if this

rule were to result in liability which

does not already exist for growers in

every circumstance in which farm labor

contractors are currently assessed back

wages or civil money penalties by the

Department of Labor, the Department

estimates that the maximum resulting

impact on growers would be less than

$4 million.

For purposes of the Unfunded

Mandates Reform Act of 1995, as well

as E.O. 12866, this rule does not include

any federal mandate that may result in

increased expenditures by either state,

local and tribal governments in the

aggregate, or by the private sector.

VI. Regulatory Flexibility Analysis

As required by the Regulatory

Flexibility Act (‘‘RFA’’), 5 U.S.C. 601–

612 (1982), the Department, in its

NPRM, certified that its proposed rule

would not have a significant economic

impact on a substantial number of small

entities. NPRM at 14037. Similarly, this

Final Rule will not have a significant

economic impact on a substantial

number of small entities.

The Final Rule contains language

which is intended to clarify what is

meant by the terms employ, employer,

employment, and joint employment

under MSPA. NCAE and other

commenters contend that the

Department must conduct a ‘‘final

regulatory flexibility analysis’’ to be

issued with the final rule because of

their view that the rule results in strict

liability and, thus, imposes new

burdens. As addressed more fully above,

the rule does not impose strict liability.

The rule simply clarifies existing

guidance to bring it into line with the

legislative history of the MSPA, as well

as the judicial rulings which have

construed its statutory terms and

definitions. This clarification will not,

however, substantively change existing

rights or obligations or impose any new

requirements, burdens or obligations on

entities that are covered by the

regulation, including small entities.

In view of the fact that the proposed

rule will simply serve to clarify a

grower’s obligation, not substantively

expand or change that obligation, the

rule will not have a significant

economic impact on a substantial

number of small entities. Therefore, no

regulatory flexibility analysis is

required.

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

Administrative practice and

procedure, Aliens, Housing, Insurance,

Intergovernmental relations,

Investigations, Migrant labor,

Occupational safety and health,

Reporting and recordkeeping

requirements, Wages.

Signed at Washington, D.C., on this 6th day

of March, 1997.

John R. Fraser,

Acting Administrator, Wage and Hour

Division.

For the reasons set forth above, 29

CFR part 500 is 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 § 500.20, paragraph (h)(4) is

revised and paragraph (h)(5) is added to

read as follows:

§ 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 a farm labor contractor engaged by

an 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 Associates,

Inc., 603 F.2d 748 (9th Cir. 1979), Sec’y

of Labor, U.S. Dept. of Labor v.

Lauritzen, 835 F.2d 1529 (7th Cir. 1987),

cert. denied, 488 U.S. 898 (1988); Beliz

v. McLeod, 765 F.2d 1317 (5th Cir.

1985), and Castillo v. Givens, 704 F.2d

181 (5th Cir.), cert. denied, 464 U.S. 850

(1983). 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 farm labor contractor or worker is

an employee or an independent

contractor, the ultimate question is the

economic reality of the relationship—

whether there is economic dependence

upon the agricultural employer/

association or farm labor contractor, as

appropriate. Lauritzen at 1538; Beliz at

1329; Castillo at 192; Real at 756. 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/her 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 require 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
11748 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Rules and Regulations

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. When the putative

employers share responsibility for

activities set out in the following factors

or in other relevant facts, this is an

indication that the putative employers

are not completely disassociated with

respect to the employment and that the

agricultural worker may be

economically dependent on both

persons:

(i) If it is determined that a 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.

(iv) The factors set forth in paragraphs

(h)(5)(iv)(A) through (G) of this section

are analytical tools to be used in

determining the ultimate question of

economic dependency. The

consideration of each factor, as well as

the determination of the ultimate

question of economic dependency, is a

qualitative rather than quantitative

analysis. The factors are not to be

applied as a checklist. No one factor

will be dispositive of the ultimate

question; nor must a majority or

particular combination of factors be

found for an employment relationship

to exist. The analysis as to the existence

of an employment relationship is not a

strict liability or per se determination

under which any agricultural employer/

association would be found to be an

employer merely by retaining or

benefiting from the services of a farm

labor contractor. The factors set forth in

paragraphs (h)(5)(iv)(A) through (G) of

this section are illustrative only and are

not intended to be exhaustive; other

factors may be significant and, if so,

should be considered, depending upon

the specific circumstances of the

relationship among the parties. 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, taking into account

the nature of the work performed and a

reasonable degree of contract

performance oversight and coordination

with third parties);

(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) The degree of permanency and

duration of the relationship of the

parties, in the context of the agricultural

activity at issue;

(D) The extent to which the services

rendered by the worker(s) are repetitive,

rote tasks requiring skills which are

acquired with relatively little training;

(E) Whether the activities performed

by the worker(s) are an integral part of

the overall business operation of the

agricultural employer/association;

(F) Whether the work is performed on

the agricultural employer/association’s

premises, rather than on premises

owned or controlled by another

business entity; and

(G) Whether the agricultural

employer/association undertakes

responsibilities in relation to the

worker(s) which are commonly

performed by employers, such as

preparing and/or making payroll

records, preparing and/or issuing pay

checks, paying FICA taxes, providing

workers’ compensation insurance,

providing field sanitation facilities,

housing or transportation, or providing

tools and equipment or materials

required for the job (taking into account

the amount of the investment).

* * * * *

3. In § 500.143, paragraph (b)(4) is

revised to read as follows:

§ 500.143 Civil money penalty assessment.

* * * * *

(b) * * *

(4) Efforts made in good faith to

comply with the Act (such as when a

joint employer agricultural employer/

association provides employmentrelated benefits which comply with

applicable law to agricultural workers,

or takes reasonable measures to ensure

farm labor contractor compliance with

legal obligations);

* * * * *

[FR Doc. 97–6036 Filed 3–11–97; 8:45 am]

BILLING CODE 4510–27–P