What the Third Circuit’s 2014 Thompson Decision Teaches Us About Pleading “Joint Employment” Under the FLSA

Our firm recently wrote a brief that required us to really focus on the Third Circuit’s decision in Thompson v. Real Estate Mortgage Network, 748 F.3d 142 (3d Cir. 2014), wherein the Third Circuit explained that, at the pleadings stage, workers are not expected to have detailed information regarding the interrelationships between corporate defendants and, therefore, cannot be expected to definitively litigate each defendants’ employer status. See Thompson, 748 F.3d at 148-49. Here is a slightly modified version of what we wrote:

In Thompson, a mortgage underwriter named Patricia Thompson alleged that two related companies – Security Atlantic Mortgage Company (“Security Atlantic”) and Real Estate Mortgage Network (“REMN”) – were jointly liable under the FLSA for improperly classifying her as overtime-exempt. See Thompson, 748 F.3d at 145-46. The district court dismissed the FLSA claim, holding that Ms. Thompson failed to plead that Security Atlantic and REMN were joint employers under the FLSA. See id. at 147; see also Thompson v. Real Estate Mortgage Network, 2012 U.S. Dist. LEXIS 190045, *12-14 (D.N.J. Aug. 31, 2012). The district court provided Ms. Thompson with the opportunity to re-plead. See Thompson, 748 F.3d at 145-46. However, she declined the invitation and appealed instead. See id.

On appeal, the Third Circuit reversed the district court. See Thompson, 748 F.3d at 148-49. In so doing, the Court made some important observations that are relevant here:

First, the Court recognized the basic principle that, in deciding Rule 12(b)(6) motions, judges must “accept as true all facts set forth in the [complaint], and draw all reasonable inferences from such allegations in favor of the claimant.” Thompson, 748 F.3d at 145 n. 1 (citing Warren General Hospital v. Amgen, Inc., 643 F.3d 77, 84 (3d Cir. 2011)).

Second, the Court explained that the FLSA “defines employer ‘expansively,’ and with ‘striking breadth.’” Id. at 148 (quoting In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litig., 683 F.3d 462, 467 (3d Cir. 2012)). In fact, “the FLSA’s definition of an employer is ‘the broadest definition that has ever been included in any one act.’” Id. (quoting Enterprise, 683 F.3d at 467-68).

Third, the Court recognized that its previous Enterprise opinion described four factors that are relevant to the joint employment analysis. See Thompson, 748 F.3d at 149 (quoting Enterprise, 683 F.3d at 469. However, the Court explained that these four factors are “non-exhaustive.” Id. That’s because the FLSA employment “determination depends on ‘all the facts of a particular case.’” Id. (quoting 29 C.F.R. 791.2(a)); see also Enterprise, 683 F.3d at 469 (“We emphasize, however, that these factors do not constitute an exhaustive list of all potentially relevant facts and should not be ‘blindly applied.’”); Field, 2015 U.S. Dist. LEXIS 193177, at *5 (same); Rapczynski v. DIRECTV, LLC, 2016 U.S. Dist. LEXIS 34833, *16 (M.D. Pa. Mar. 17, 2016)

Fourth, the Court explained that the employment analysis often turns on evidence that is unavailable at the pleadings stage and goes beyond the personal knowledge of the individual plaintiff: “We caution that our assessment rests heavily on the procedural posture of this litigation. Thompson, a low-level employee with each of the defendant companies, has had no opportunity for discovery as to payroll and taxation documents, disciplinary records, internal corporate communications, or leadership and ownership structures. It may well be that a fully developed factual record will preclude a finding that Security Atlantic and REMN were “joint employers” of Thompson for any of the pay periods at issue. But under these circumstances, we cannot say that Thompson’s Amended Complaint fails to state a claim upon which relief can be granted. We will vacate the District Court’s dismissal of Thompson’s claims in this regard and remand for further proceedings.” Thompson, 748 F.3d at 149 (emphasis supplied).

Fifth, the Court held that Ms. Thompson adequately pled joint employment based on only three factual allegations: (i) that REMN provided her with training after she was hired by Security Atlantic; (ii) that one of the trainers referred to REMN as being Security Atlantic’s “sister company;” and (iii) that, after Security Atlantic went out of business, Ms. Thompson was integrated into REMN’s business. See Thompson, 748 F.3d at 149; see also Harris v. Medical Transportation Management, Inc., 300 F. Supp. 3d 234, 243 (D.D.C. 2018) (“defeating a claim of joint employment at the motion to dismiss stage is no easy task”); Benitez v. Demco of Riverdale, LLC, 2015 U.S. Dist. LEXIS 20325, *4 (S.D.N.Y. Feb. 19, 2015) (whether a franchisor is a joint employer “presents a question of fact that cannot be resolved on a pre-answer motion to dismiss”); Aguilar v. United Floor Crew, 2014 U.S. Dist. LEXIS 166468, *9 (S.D. Fla. Dec. 1, 2014) (joint employment “inquiry is ill-suited for consideration on a motion to dismiss.”); Jennings v. Rib King West Palm, LLC, 2012 U.S. Dist. LEXIS 183959, *6 (S.D. Fla. Aug. 15, 2012) (“resolution of this matter at this stage in the proceedings is premature”).

We hope you will find the above discussion helpful the next time a defendant alleges that you complaint does not adequately plead joint-employment under the FLSA.

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