ESA Final Rules

Migrant and Seasonal Agricultural Worker Protection Plan   [3/12/1997]
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Part X





Department of Labor





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Wage and Hour Division



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29 CFR Part 500



Migrant and Seasonal Agricultural Worker Protection Plan; Final Rule


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DEPARTMENT OF LABOR
Wage and Hour Division

29 CFR Part 500

RIN 1215-AA93

 
Migrant and Seasonal Agricultural Worker Protection Act

AGENCY: Wage and Hour Division, Employment Standards Administration, 
Labor.

ACTION: Final rule.

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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. 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 * * *''67 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 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