Would You Like Some Pepperoni with Your (Oops) Joint Employment?

Joint employment pizza 31E83EC5-E554-428A-A5D6-37F13905C3B9According to pizza.com, “There are approximately 61,269 pizzerias in the United States.” That number seems pretty precise to me, not an approximation, but who am I to question something I read on the internet?

Approximately 4 of the 61,269 pizzerias are owned by a New Yorker named Paola P., who runs each of the 4 under a different LLC. Paola’s employees can be assigned to any of the 4 pizzerias on their workdays. Seems boring so far, but stay with me. Now say this three times fast:

Paola’s practice prompted problems since Paola P’s pizzerias were impermissibly positioning personnel to prevent paying overtime. 

Pity.

Workers were being assigned to work roughly 50 hours a week, but they would work at two or three locations, less than 40 hours at each site. They received paychecks from the various LLCs (remember, each pizzeria was run as a separate company), which by itself is ok, but Paola’s mistake was that she failed to aggregate the hours from the 4 locations and failed to pay overtime when any individual exceeded 40 hours of total work.

Because the pizzerias shared ownership, management, and commingled employees, the workers were considered joint employees of the four companies. For those keeping score at home, that’s what we call “horizontal joint employment.”

Paola’s companies were liable for failure to pay overtime to each worker in any week when an employee worked more than 40 hours in the aggregate, even if no worker reached 40 hours at any individual location.

A federal court determined that the violation was flagrant and imposed the three-year statute of limitations, instead of the ordinary two-year statute.

This was a $360,000 mistake, half of which was for liquidated (double) damages.

According to our friends at Guinness, the world’s most expensive pizza can be ordered for $2,700 at Industry Kitchen in New York. This magical pie contains stilton (it’s a cheese, I had to look it up too), foie gras, caviar, truffle, and 24K gold leaves. Paola could have ordered 133 of these and still had some money left for dessert.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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