The 11th U.S. Circuit Court of Appeals recently ruled the use of contractors made the Wood Airfreight location of DHL Express a multiemployer – not a single employer – worksite. The court issued a ruling that the mass layoffs at the facility did not meet the threshold for necessary worker notification under the Worker Adjustment and Retraining Notification (WARN) Act.
Employee notification
The court's holding brings some much-needed clarity to the WARN Act, which requires employers of 50 or more employees at a single site to provide 60 days notice before any plant closings or layoffs, according to the U.S. Department of Labor. WARN applies to both hourly and salaried employees, including those at managerial and supervisory levels, as long as they have been with the company six months or more and work more than an average of 20 hours per work. In general, a business is covered by WARN if it has 100 or more such employees.
Classifying single or multiemployers
The DOL's regulations concerning the implementation of the WARN Act state that an independent contractor can be classified as a either separate employer at a site or a joint employer with the contracting company "depending upon the degree of their independence." The DOL outlines five factors for determining whether an independent contractor is a distinct or joint employer with the contracting company:
• Common ownership
• Common directors and/or officers
• De facto exercise of control
• Unity of personnel policies emanating from a common source
• Dependency of operations
If the contractor is a joint employer, the number of its employees would be included in the calculation for determining if they fall under the WARN Act.
The court's decision
Darriest Likes, the plaintiff in the case, argued DHL had more than 100 employees at one facility if the court counted employees from the three separate contractors who used the site. But the court ruling reasoned that the definition of a single site is more limited to day-to-day management, administration and personnel flow, the Society for Human Resource Management reported. Though DHL's three groups of contractors, including Wood Airfreight, all shared the same facility, they had distinct management.
"The evidence is undisputed that Wood Airfreight hired and fired its own employees, maintained its own personnel policies, rented its own delivery equipment and ran its own payroll," the court said. "Mr. Likes has presented no evidence suggesting that employees moved between the different contractors at the Birmingham facility or that the contractors shared day-to-day management."
For HR professionals at businesses that use contractors, the ruling helps answer lingering confusion about what constitutes a multiemployer worksite and how mass layoffs should be handled while still complying with the WARN Act.