On September 10, 2021, the California Court of Appeal approved a series of testing measures for joint employers in the state of California, lowering the degree of what constitutes “autonomous control” that companies have over the wages and conditions of their employees. This creates a possible new liability for joint entrepreneurs and employers, who now face a wider range of legal restrictions on their control over finances and work activities.
Following a verdict in favor of the plaintiff in Santiago Medina vs. Equilon Enterprises, LLC. The plaintiff accused the operator MSO and Shell, alleging violations of the Labor Code and arguing that Shell was their joint employer, based on Shell’s level of control over the operations of its gas stations.
An extensive legal investigation led the court to determine that Shell exercised almost total control over the finances, day-to-day operations, facilities, and practices of the MSO operators, extending to the point where the transnational could have prevented the employees from working at their assigned stations. Moreover, according to the statements of several witnesses, this control extended to other areas, such as the management of operators’ bank accounts, the assignment of workstations, and even the ability to fire MSO employees.
For companies operating on joint employer models, this verdict sets a new precedent. From now on, employers must be aware of the many factors that can cause them to be considered joint employers of their workers. Thanks to this measure that seeks to protect the rights of employees, a company that considers itself a joint employer runs risks of liability for costly litigation that may include, but is not limited to, defense against claims for withholding of wages, unjustified penalties, and even violations of contract.