Enforcing Fair Labor Standards in the Modern American Sweatshop: Rediscovering the Statutory Definition of Employment

Abstract

Employers’ treatment of workers as nonemployees to avoid compliance with labor standards is epidemic. This Article offers a statutory interpretation to put an end to this sham under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act by reexamining the approach to determining coverage where a firm’s contractor hires, supervises, and pays workers.

When larger companies use judgment-proof contractors to lower their labor costs by evading these acts, courts deciding whether to hold them liable as “employers” of contractor-hired workers almost invariably ignore the statutory definition of “employ” (“includes suffer or permit to work”), applying, instead, a test based on the common law’s restrictive definition of employment, under which the engaging party had the right to control how the work was performed.

To permit to work was broader: it did not require the affirmative act of engaging someone to work, but only a decision to allow the work to take place. To suffer to work was broader still: encompassing to tolerate or acquiesce in, it required only that the business owner have the reasonable ability to know the work was being performed and the power to prevent it. Thus, work performed as a necessary step in the production of a product was almost always suffered or permitted by the business owner. When such work is part of the owner’s production process, it makes no difference that the workers were hired, paid, and supervised by another. Consequently, the business owner may avoid accountability only if his contractor has such a high level of expertise and capital investment that the business operates autonomously from the business owner.

This Article argues for a return to the statutory “employ” language, which was intended to deny a competitive advantage to employers who maintained substandard labor conditions through abusive subcontractors.

Keywords: joint employment, employment relationship, Fair Labor Standards Act, Migrant and Seasonal Agricultural Worker Protection Act, contractors, subcontracting, contracting out, minimum wage, overtime, suffer or permit to work