Seyfarth Synopsis: On October 13, 2022, the Supreme Court of Virginia analyzed whether individuals may be joint employers under Virginia’s Wage Payment Act. Answering in the negative, the Court held that the statute defined “employer” more narrowly than the FLSA, and thus extended joint employment liability only to entities, not individuals, acting in the interest of an employer.
In Cornell v. Benedict, two licensed therapists had brought a state-law collective action against the practice alleging violations under the Virginia Wage Payment Act after they and similarly situated therapists never received the commissions owed to them. Although they had sued the financially-strapped practice, they also asserted claims against two members of the practice’s management team alleging that, because they had acted in the interest of CPS, they qualified as joint employers under Virginia law.
In assessing whether individuals could qualify as joint employers within the meaning of the Wage Payment Act, the Virginia Supreme Court compared the language of the Wage Payment Act to that of the FLSA and concluded that the Virginia legislature defined “employer” more narrowly. To reach that conclusion, the Court observed the FLSA defined “employer” to include “any person” acting in directly or indirectly in an employer’s interest. The Virginia legislature, however, had replaced “any person” with “any similar entity.”
The Court applied ordinary canons of statutory interpretation in assessing this textual difference. Indeed, other Virginia labor statutes had included the FLSA’s “any person” language, leading the Court to conclude that the Court’s use of “any similar entity” was intentional and required that the statute be given a correspondingly different interpretation. Thus, because joint employment extended only to an “entity” under the Wage Payment Act, the Court determined that the members of the practice’s management team could not qualify as joint employers.
Implications for Employers
This case is one of the first to interpret the recent amendments to the Virginia Wage Payment Act and confirms that employment under the act is not coterminous with the FLSA. It is a significant victory for high-level officers and employees who are typically named as alleged co-employers in wage-and-hour actions for little reason other than to manufacture settlement pressure. The case also serves as a reminder that significant differences exist between various federal and state wage-and-hour laws on issues as basic as when an employment (or joint employment) relationship exists. Similarly, under the FLSA, meaningful differences exist in the standards applied by federal courts, and regulatory efforts at establishing uniformity have yet to produce lasting results. Thus, businesses should regularly examine their relationships with their workers, and those of entities with which they contract for labor, to assess potential exposure under both federal and state law.