## Facts

- A group of garment workers in New York City’s Chinatown sued for unpaid minimum wages and overtime under the Fair Labor Standards Act (FLSA) and New York wage laws.
- The workers were hired and paid by small garment contractors that operated sewing shops; the workers were paid by the piece.
- Liberty Apparel Co. designed patterns, made samples, purchased fabric, and cut fabric, then sent cut fabric to contractors for sewing and finishing.
- The workers alleged they spent roughly 70–75% of their working time assembling Liberty garments.
- The workers presented evidence that Liberty personnel visited the shops several times per week, inspected work, and directed corrections.
- The workers claimed Liberty was a joint employer because their work was integral to Liberty’s production process and was frequently supervised by Liberty’s agents.
- Liberty argued it was not an employer because it did not hire or fire workers, set wages or hours, or maintain employment records; it characterized the contractors as independent businesses.
- The district court granted summary judgment to Liberty, treating absence of “formal control” as determinative of the joint-employer issue.
- The workers appealed.

## Issues

1. Whether Liberty could be liable as a joint employer under the FLSA and New York wage laws for workers formally employed by independent garment contractors.
2. Whether lack of formal control (hiring/firing power, wage-setting, schedule control, recordkeeping) defeats joint-employer status as a matter of law.
3. What additional considerations, beyond formal control, govern the “economic reality” of joint employment under the FLSA.

## Decision

- The Second Circuit vacated the summary judgment for Liberty and remanded for further proceedings.
- The court held that the FLSA’s broad “suffer or permit to work” standard does not require proof that the putative employer exercised formal employer prerogatives.
- The court ruled that the district court erred by treating formal-control factors as exclusive and rigid.
- The court identified a set of non-exclusive functional/economic-reality factors for assessing joint employment and concluded the record contained triable disputes under those factors.
- The court held a reasonable factfinder could find Liberty a joint employer even if Liberty lacked direct authority over hiring, firing, pay, schedules, and records.

## Legal Principles

- Under the FLSA, “employ” includes “to suffer or permit to work,” requiring an economic-reality inquiry rather than a narrow focus on formal control.
- Traditional formal-control indicia (power to hire/fire; supervision and schedule control; determining rate/method of payment; maintaining records) are relevant but not exhaustive, and absence of any single factor is not dispositive.
- Joint employment may be shown through functional control, assessed under non-exclusive factors including:
  - Whether the work is performed on the putative employer’s premises or using its equipment.
  - Whether the contractors have a business that can shift as a unit among manufacturers.
  - Whether the workers perform a discrete line job integral to the putative employer’s production process.
  - Whether the relationship reflects permanence or predominant/exclusive work for the putative employer.
  - The degree to which the putative employer supervises the work (including quality control and directing corrections).
  - Whether the putative employer controls working conditions indirectly through contractual or practical arrangements.
- The ultimate question is the totality of the circumstances; no single factor determines joint-employer status.

## Conclusion

The Second Circuit held that joint-employer liability under the FLSA and parallel New York wage laws turns on the economic reality of the relationship, so a manufacturer may be a joint employer without exercising formal employer powers when evidence supports functional control; summary judgment for the manufacturer was therefore improper.


Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003)