Page 64 - AAGLA 2020-11
P. 64

 Member Update
The Station Operator alone made all disciplinary and promotional decisions with respect to the manager, determined when she could take time off and paid her. Although Shell reimbursed the Station Operator for the costs of operating the fuel station – which the manager argued was tantamount to Shell paying him – the court found no evidence that the reimbursement affected the manager’s wages. Yet another point for Shell. Although Shell had the right to ask the Station Operator to remove an employee from the service station, Shell could not actually fire the manager; the Station Operator could continue to employ the manager at a different location. One more for Shell.
The station manager’s work was part of the Station Operator’s regular business, i.e., operating gas stations. Shell, on the other hand, was not in the business of operating service stations, but rather of owning them. The manager’s work at the fueling station therefore was not part of Shell’s business. The court here made an analogy you may find interesting, so I will quote it:
“For example, if the owner of an apartment complex hires a property management company, and that property management company hires an onsite manager for the complex, the owner is not engaged in the business of property management. Rather, the owner is in the business of owning real estate, while the property management company is in the business of managing properties. Shell’s contract with [Store Operator] did not put Shell in the business of operating fuel stations.”
Shell was deemed to have provided some of the equipment for the manager’s job, since it provided the fueling islands. One point for the station manager. With respect to the parties’ subjective beliefs as to who was employing the station manager, the court noted that manager applied for the job with the Station Operator, not Shell. One final point for Shell.
As you can see, the court did not find this a close call. It determined that Shell likely did not control the
manner and means by which the station manager accomplished her work because Shell did not supervise her, did not have input as to her skills, did not control the length of time she performed her job, did not pay her, was not in the business of operating service stations, and Shell and the manager did not believe they were creating an employer- employee relationship. But – and this is an important “but” – there exists, in one court’s words, “no magic formula” for determining whether an entity is a joint employer. The analysis here is highly factual and no one factor is decisive.
So, let’s imagine the following situation: property management company hires the resident manager, but property owner has veto power. Resident manager works fulltime in managing owner’s building, takes some direction from owner, owner supplies resident manager’s apartment (not to mention the building in which resident manager works), resident manager is paid out of a trust account over which property management company and owner have joint control, and owner reserves the right to demand resident manager’s termination. As you can see, each fact we tweak could yield a different “joint employer” analysis. Certainly, the greater the level of control and involvement by the owner, the greater the risk a court might find the owner to be a joint employer under the factors we analyzed above.
Now let us flip this around. Let’s say the resident manager is put on the owner’s payroll, but takes direction from the management company, which has the right to terminate him. Here a court undoubtedly would find the management company to jointly employ the resident manager.
The takeaway here is that if you are a management company, requiring the resident manager to contract with the owner is unlikely to take you off the hook as the resident manager’s employee. And if you are an owner, be advised that the more hands-on and involved you are in the building’s operation, the more at risk you place yourself of being deemed a joint employer – even if your management company pays the resident manager.
Gary Ganchrow is a shareholder at Parker Milliken Clark O’Hara and Samuelian, an Adjunct Professor at the USC School of Law, and frequent contributor to Apartment Age. He regularly advises on, litigates and writes about a variety of employment, property management, and business matters, and can be reached at (213) 683-6535 or This article is for informational purposes only and should not be considered legal advice or establishing an attorney-client relationship.

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