Castillo v. Glenair, Inc. examines a novel joint employer question

The term "joint employer" is used to identify the wide variety of situations where one worker is controlled in frequently different ways by two employers.  Staffing agency relationships with client companies are a commonly cited example.  In Castillo v. Glenair, Inc., the Court of Appeal (Second Appellate District, Division Two), tackled a novel question:

In a joint employer arrangement, can a class of workers bring a lawsuit against a staffing company, settle that lawsuit, and then bring identical claims against the company where they had been placed to work.

Slip op, at 2.  The Court's answer was succinct: "We answer no."  (Slip op., at 2.)

Before you get the wrong idea, this is not the situation you might have first imagined.  One firm did not sue a staffing agency, settle, and then bring the identical set of claims against the client company of the staffing agency.  Rather, the staffing company class action was running in parallel before another trial court and made it to the settlement finish line first.  (Slip op., at 2.)  There are many procedural niceties to this that don't matter.  What matters is that the first suit (known as the "Gomez" action), settled on a classwide basis, with a broad release of claims against the staffing company and its agents.  The Court in this matter concluded that Glenair was an agent of CGA with respect to CGA's payment of wages to its employees who performed work at Glenair.

While the reasoning of the Court is guided, in part, by a number of factual stipulations of the parties regarding the relationship between Glenair and the staffing company GCA, the core issue for purposes of res judicata application of the Gomez settlement hinged on whether Glenair was either a party in the Gomez settlement or in privity with a party.  The Court found that Glenair was both in privity with CGA as to the Gomez settlement and a released party in the Gomez settlement.

After reviewing developments in the law of privity, the Court said:

With this in mind, it is clear Glenair and GCA are in privity for present purposes. The subject matter of this litigation is the same as the subject matter of the Gomez litigation—namely, both cases involve the same wage and hour causes of action arising from the same work performed by the same GCA employees (the Castillos) at GCA’s client company Glenair. Based on the undisputed facts, it is apparent Glenair and GCA share the same relationship to the Castillos’ claims here. Both Glenair and GCA were involved in and responsible for payment of the Castillos’ wages. Glenair was authorized by GCA and responsible for recording, reviewing and transmitting the Castillos’ time records to GCA. GCA paid the Castillos based on those time records. And, by virtue of the Gomez settlement, the Castillos were compensated for any errors made in the payment of their wages. Thus, with respect to the Castillos’ wage and hour causes of action, the interests of Glenair and GCA are so intertwined as to put Glenair and GCA in the same relationship to the litigation here. Accordingly, we conclude they are in privity for purposes of the instant litigation.

(Slip op., at 23.)  The Court emphasized that this should not be construed as a finding that Glenair and GCA are in privity for all purposes (e.g., a tort claim for an on-premises injury).  The Court also found that Glenair was an agent of CGA based on facts that could not be reasonably construed any other way:

Glenair was an agent of GCA for the purpose of collecting, reviewing, and providing GCA’s employee time records to GCA so that GCA could properly pay its employees. The evidence is undisputed that GCA authorized Glenair to collect, review, and transmit GCA employee time records to GCA. Thus, Glenair was authorized to represent, and did represent, GCA in its dealings with third parties, specifically GCA’s payment of wages to its employees placed at Glenair. (Civ. Code, § 2295; Borders Online, supra, at p. 1189; see also Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 788 [in concluding the plaintiff employee’s claims must be arbitrated, court considered “alleged joint employers” staffing company and its client company “agents of each other in their dealings with” the plaintiff].)

(Slip op., at 26.) The Court rebuffed the plaintiffs' argument that there was no evidence of the requisite control necessary to support the agency conclusion:

Here, GCA authorized Glenair to perform certain timekeeping-related tasks on behalf of GCA and the only reasonable inference is that GCA required Glenair to perform those tasks. Had Glenair failed to perform those timekeeping tasks, GCA would not have been able to pay its employees.

(Slip op., at 27.)  This raises a question in my mind.  Many large staffing companies install their own timekeeping systems in the workplaces of large clients.  If the staffing company collects its own time records, or its employees report time themselves, does this vitiate the agency analysis in this decision?

The decision also includes an extended discussion of procedural rules governing summary judgment, if that floats your boat.

Respondent was successfully represented by Jesse A. Cripps, Sarah Zenewicz and Elizabeth A. Dooley of Gibson, Dunn & Crutcher,