Further Clarification of the Employment Relationship for Temporary and Loaned Employees

In the context of employment litigation, determining whether an employer-employee relationship actually exists between the plaintiff and defendant employer is a common and critical issue. The question becomes more complex when the circumstances involve staffing agencies and loaned workers. From personal injuries to retaliation and harassment, the question of which entity is the worker’s employer, or whether a joint employment relationship exists, is an important one. California courts have generally answered this question by examining the totality of the circumstances and who exercises direction and control over the employee’s performance and duties. (Bradley v. Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1612, 1626.)

This principle was tested again in the matter of Jimenez v. U.S. Continental Marketing, Inc. (Cal. Ct. App., Oct. 17, 2019, No. D075532) 2019 WL 5257938 (“Jimenez”). One of the employers in this case, U.S. Continental Marketing (USCM) made shoe care products and relied heavily on temporary employees for its workforce. The plaintiff, Jimenez, was one such temporary employee who was placed at USCM at the direction of the staffing agency, Ameritemps. After five years working at USCM, Jimenez’ services were terminated not long after an investigation concluded she had violated the USCM’s anti-bullying policy. Shortly thereafter, Ameritemps also terminated Jimenez’ services.

Jimenez later brought suit against both USCM and Ameritemps for wrongful termination, retaliation, harassment, and more. The matter proceeded to trial, and one of the questions posed to the jury was whether Jimenez was actually employed by USCM. The jury determined that she was not an employee, and Jimenez appealed.

The court of appeal largely followed in the footsteps of Bradley in determining Jimenez’ employment status and, like the court in Bradley, gave significant weight to Fair Employment and Housing Council’s (“FEHC”) regulations. The court first noted the definition of “employee” as “[a]ny individual under the direction and control of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written.” (Cal. Code of Regs., tit. 2, § 11008, subd. (c).) Also critical to the court’s analysis was the FEHC’s regulation that an individual compensated by a temporary service agency for an employer contracting with that agency may be considered an employee of the employer “for such terms, conditions, and privileges of employment under the control of that employer.” Accordingly, the court determined, the issue once again came back to the question of control but only as it pertained to those aspects of employment actually within the direct control of the employer in question, such as the terms, conditions, and privileges of her employment.

For example, in Jimenez, USCM argued it was not Jimenez’s employer because it lacked control over her in that it (1) did not hire her; (2) did not track her time; (3) did not pay her or provide her with benefits; and (4) did not terminate her employment with her direct employer, Ameritemps. The court of appeal held that USCM’s position was not the correct way of framing the question of control, because all of these factors related to Ameritemps’ control over Jimenez, not USCM’s control over Jimenez. Since USCM was not involved in hiring Jimenez, in tracking her time, or compensating her, these issues had no bearing on the question of its control over Jimenez’s work conditions. The court further concluded that the fact that USCM did not, and could not, terminate Jimenez’ employment with Ameritemps was also non-determinative. The question was rather whether USCM had the power to terminate Jimenez’ employment with USCM. This inquiry favored Jimenez’ argument that an employment relationship existed, as did the facts that she supervised thirty other USCM employees, reported to a USCM employee, was subject to USCM’s employee handbook, and benefited from USCM’s in-house training. In other words, the court found clear evidence that an employment relationship existed between Jimenez and USCM. The court further determined that such evidence cannot be rebutted only by evidence of “direction and control” factors related to activities outside of that employer’s control. The court therefore reversed the jury’s finding and instructed the jury during the retrial that USCM was Jimenez’ employer.

While Jimenez further solidifies the joint employer relationship between temporary workers of a company contracting with a staffing agency, the court nevertheless declined to issue any bright-line test to resolve the question of control. The question still turns on a case-by-case assessment and upon a consideration of “the totality of circumstances [as viewed] through the lens of a temporary staffing dynamic or other contractual framework.”

This document is intended to provide you with information about employment and labor law related developments. The contents of this document are not intended to provide specific legal advice. If you have questions about the contents of this alert, please contact the authors. This communication may be considered advertising in some jurisdictions.

October 29, 2019