Migrant and Seasonal Agricultural Worker Protection Act

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.

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\1\ Strict 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.

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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

[[Page 11735]]

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

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\2\ H.R. Rep. No. 885, 97th Cong., 2d Sess. 1, reprinted in 1982

U.S.C.C.A.N. 4547 (''House Comm. Rept.'').

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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

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

Miller).

\4\ Id, at 26,008.

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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.

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\5\ Sec. 500.20(h)(5),(h)(5)(iv).

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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

[[Page 11736]]

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.

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

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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.

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\7\ American Hospital Ass'n v. NLRB, 899 F.2d 651, 657 (7th Cir.

1990), aff'd 499 U.S. 606 (1991).

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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).

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\8\ Beliz 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).

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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

[[Page 11737]]

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

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\9\ House Comm. Rept. at 4552-53.

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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

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\10\ House 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).

\11\ House Comm. Rept. at 4553; Griffin and Brand at 237.

\12\ House 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).

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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

well-established 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 user-friendly 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

[[Page 11738]]

inevitably lead to the creation of a strict liability standard or

presumption.

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\13\ House 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).

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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

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\16\ See Antenor v. D & S Farms, 88 F.3d 925, 932 (11th Cir.

1996).

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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.

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\17\ House Comm. Rept. at 4553.

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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

[[Page 11739]]

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

---------------------------------------------------------------------------

\18\ Beliz at 1329-30; Haywood v. Barnes, 109 F.R.D. 568, 589

(E.D.N.C. 1986). Contra Aimable, at 440-441.

\19\ Aimable at 441; Griffin and Brand at 238; Monville v.

Williams, 107 Lab. Cas. (CCH) P34,978, at 45,252-253 (D. Md. 1987).

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\20\ Haywood at 589; cited in Barrientos v. Taylor, 917 F. Supp.

375, 383 (E.D.N.C. 1996).

---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

\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).

\22\ Haywood 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.

---------------------------------------------------------------------------

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

[[Page 11740]]

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 FLC 24 or may

effectively determine the workers' compensation rates through the

amount of the payments to the FLC. 25

---------------------------------------------------------------------------

\23\ Beliz at 1328; Castillo at 192; Griffin & Brand at 237-38;

Antunez at p 46,173; Haywood at 587.

\24\ Beliz at 1328; Griffin & Brand at 238; Alviso-Medrano v.

Harloff, 868 F. Supp. 1367, 1373 (M.D. Fla. 1994); Haywood at 590-

91; Monville at 45,253.

\25\ Beliz at 1328; Castillo at 192; Alviso-Medrano at 1373;

Monville at 45,253; Maldonado at 487.

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\26\ See, e.g., Beliz at 1322, 1328; Maldonado at 487.

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\27\ See 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.

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\28\ Rutherford 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.

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\29\ Ricketts 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).

---------------------------------------------------------------------------

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

[[Page 11741]]

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.

---------------------------------------------------------------------------

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

755; Antunez at 46,174; Fahs at 44. But cf. Aimable at 444.

---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

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

755; Antunez at 46,174; Fahs at 44. But cf. Aimable at 444.

---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

\32\ Rutherford Food at 726, 729-730; Aimable at 444; Griffin &

Brand at 237-238; Beliz at 1328; Castillo at 192; Fahs at 42-43.

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\33\ Rutherford Food at 726, 729-730; Aimable at 444; Griffin &

Brand at 237-238; Beliz at 1328; Castillo at 192; Fahs at 42-43.

---------------------------------------------------------------------------

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 joint-employment 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

[[Page 11742]]

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.

---------------------------------------------------------------------------

\34\ Antenor at 937; Griffin & Brand at 237; Fahs at 42; Beliz

at 1328.

\35\ Antenor 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.')

---------------------------------------------------------------------------

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

[[Page 11743]]

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.

---------------------------------------------------------------------------

\36\ Antenor, supra.

\37\ Rutherford Food at 730; Lauritzen at 1538; Pilgrim

Equipment at 1311.

---------------------------------------------------------------------------

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.''

---------------------------------------------------------------------------

\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.

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\41\ House Comm. Rept. at 4553.

---------------------------------------------------------------------------

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

[[Page 11744]]

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:

---------------------------------------------------------------------------

\42\ House Comm. Rept. at 4549.

---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

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

elimination of this shielding effect of recruiter-contractors 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.'')

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\44\ This data is based on information from DOL registrations of

FLCs.

---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

\45\ See 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).

---------------------------------------------------------------------------

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 Sec. 500.20(h)(4)(iii)

states in relevant part: ``[t]he putative employee's investment in

equipment or materials required for the task * * *''. UFW-Texas

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 UFW-Texas

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

[[Page 11745]]

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 employment-related 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.

---------------------------------------------------------------------------

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

---------------------------------------------------------------------------

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

[[Page 11746]]

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.

---------------------------------------------------------------------------

\47\ See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326

(1992); Rutherford Food at 728-729 (1947); Lauritzen at 1534.

\48\ See Lauritzen at 1534, 1538; Beliz at 1327; Real at 754.

\49\ See Rutherford Food at 727, 729; Griffin & Brand at 237.

\50\ Rutherford Food at 727, 729; Griffin & Brand at 237.

---------------------------------------------------------------------------

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)).

---------------------------------------------------------------------------

\51\ E.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.

---------------------------------------------------------------------------

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.

---------------------------------------------------------------------------

\52\ House Comm. Rept. at 6-7.

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

\54\ House Comm. Rept. at 7

---------------------------------------------------------------------------

The current MSPA regulation, promulgated in 1983, sets out a non-

exclusive 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

[[Page 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 Sec. 500.20, paragraph (h)(4) is revised and paragraph (h)(5)

is added to read as follows:

Sec. 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

[[Page 11748]]

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 Sec. 500.143, paragraph (b)(4) is revised to read as follows:

Sec. 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 employment-

related 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