Zheng v. Liberty Apparel Legal Summary
The 103 workers recently succeeded in overturning
Judge Casey's lower court decision. Now the 2nd Circuit has sent
the case back to Judge Casey who originally ruled against the
Liberty workers. It is critical that we organize now before the
case is reheard in the lower court this fall.
In his first decision, Judge Casey used the Carter
test which is used to prove whether an entity is an employer.
However, the issue in this case is whether an entity is a joint
employer of a worker, i.e. a worker has two employers for the
same work. The Carter test only looks at four factors of whether
Liberty had the power to:
-
hire and fire the Liberty workers
- supervise and control their work schedules or conditions
- set their rate and method of payment, and
- kept employment records
In the Lopez case, Judge Cotes used a broader economic realities
test to determine whether the garment manufacturer in that case
was a joint employer. Those seven factors include:
- If the 103 workers' work was integral to Liberty's production
process;
- if Liberty's premises/equipment were used for the work done
by the 103 workers,
- the percentage of the 103 workers' work that was done for Liberty,
- the permanence and duration of the work relationship between
the 103 workers and Liberty,
- the degree to which Liberty supervised the 103 workers' work,
- whether the same 103 workers would do the same work for Liberty
despite a change in subcontractor, and
- whether the 103 workers worked only or mostly for Liberty
In Zheng, the 103 workers' lawyer used two arguments:
- The "suffer or permit" standard under federal and
state law applied to manufacturers like Liberty and DKNY. Under
the suffer or permit standard, Liberty is the employer of the
103 workers since Liberty knew that the work done at the 103 factory
was being done for its benefit and that it was an integral step
in Liberty's production process. The 103 workers' lawyer then
argued that using the economic realities/joint employer test,
even with the broader Lopez factors, was unnecessary since the
suffer or permit standard under federal and state law was sufficient
to hold Liberty responsible.
- That Liberty was liable under New York Labor Law §345-a
which holds manufacturers accountable for its contractors' labor
law violations when that manufacturer should have known about
those violations.
The 2nd Circuit concluded that:
- Judge Casey used the wrong test.
- Judge Casey wrongfully dismissed the NY state law claims This
is significant because NY state caselaw includes a case that used
the same "suffer or permit" standard and which supported
the 103 workers' argument. However, the U.S. 2nd Circuit did not.
Address the 103 workers' state claim.
- A different, more pro-business, interpretation of the Lopez
factors should be used when applying the economic realities test
to decide who is a joint employer.
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