Labor & Employment Law Daily In overtime suit, ‘lumping’ HP-related defendants together was insufficient to allege joint-employer status
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Friday, April 10, 2020

In overtime suit, ‘lumping’ HP-related defendants together was insufficient to allege joint-employer status

By Marjorie Johnson, J.D.

The employee failed to sufficiently allege a joint-employer relationship. She also failed to make any factual allegations that would state a plausible claim against a parent or successor company.

An employee who brought a putative class action asserting violations of the FLSA and California wage-hour law failed to plausibly allege an employment relationship with two of the four corporate defendants that allegedly “originated either with Hewlett Packard or a merger of one company with a part of Hewlett Packard,” a federal district court in California held. Granting the defendants’ motion to dismiss, the court ruled that she failed to sufficiently plead that the two companies were her joint employers, such as alleging that they had the power to hire and fire her, and her mere allegation that she was hired by defendants’ “predecessors” was similarly deficient. But she was granted leave to amend her complaint (Perez v. DXC Technology Services LLC, March 31, 2020, Freeman, B.).

The employee filed this action against four entities—DXC Technology Services LLC (DXC), Hewlett Packard Enterprise Company (HPE), HP Enterprise Services, LLC (HPES), and Enterprise Services, LLC (ES)—alleging that the defendants failed to pay her and the putative class for all hours worked, including overtime, in violation of the FLSA, and violated various California wage and hour laws. She also sought civil penalties pursuant to the Private Attorneys General Act (PAGA) against all defendants.

Motion to dismiss. Her lawsuit claimed that she was hired by defendants’ “predecessors” in June 2003, who classified her as a no-exempt hourly employee, but that the defendants misclassified her and the putative class members as exempt employees and denied them overtime compensation and meal or rest periods. At issue was the defendants’ motion to dismiss all her claims against DXC and HPE, and to dismiss her PAGA claim as against all defendants.

Didn’t plausibly allege “employer.” The defendants first argued that she failed to plausibly allege that DXC or HPE were her “employer.” In opposition, she argued that the defendants jointly employed her, citing her allegation that each defendant “acted in all respects pertinent to this action as the agent of the other defendants, carried out a joint scheme, business plan or policy in all respects pertinent hereto, and that the acts of each defendant are legally attributable to each of the other defendants.” She also asserted that the defendants “all originate either with Hewlett Packard or a merger of one company with a part of Hewlett Packard.”

Can’t just “lump” all defendants together. Siding with the defendants, the court found that the employee was required to sufficiently allege the employment relationship against each defendant, but that she failed to do so with regard to DXC and HPE. It was not enough “to make conclusory allegations by lumping all [d]efendants together,” and to generally allege that she and the putative class members had been nonexempt employees of defendants.

And while joint-employer status has long been recognized in wage and hour suits, she failed to sufficiently plead that DXC and HPE were her joint employers. For example, she did not allege that either company and HPE had the power to hire and fire her. Her conclusory allegation that all defendants employed her and the putative class was insufficient.

“Predecessor” allegation insufficient. The employee’s allegation that she was hired by defendants’ “predecessors” was similarly deficient. First, she failed to identify the “predecessor” or explain how it was related to each of the defendants. Second, she failed to make any factual allegations that would state a plausible claim against a parent or successor company. This was important since corporate entities are presumed to have separate existences, and an employee seeking to hold a parent corporation liable for the acts or omissions of its subsidiary “on the theory that the two corporate entities constitute a single employer has a heavy burden to meet under both California and federal law.”

In her opposition brief, the employee attempted to describe the relationship among defendants, their predecessors, and her current employer. She also asserted that her “paystubs included HPE’s Logo” and that she was “subject to policies and practices” of HPE and DXC. While these facts could not be considered in determining whether she currently stated a plausible claim against the two companies, the court considered them in deciding to grant her one final chance to amend her complaint as opposed to granting the defendants’ motion to dismiss with prejudice.

PAGA claims. The defendants also argued that her PAGA claim should be dismissed in its entirety since she failed to exhaust her administrative remedies against the two defendants who were her employers, and could not state a PAGA claim against the two who were not. She responded that she was able to cure this issue through an amended complaint and another PAGA notice and that she was currently employed by defendants under a new company name (which HPES and ES denied was the same legal entity).

Unwilling to rule on this issue, the court granted the defendants’ motion to dismiss the PAGA claim but with leave to amend. The employee was instructed that she must plead sufficient facts to establish a plausible claim that she has exhausted all administrative remedies as to each defendant. And because she had already been given several opportunities to name the correct defendants and plead facts that would state a plausible claim, this would be her “final opportunity to cure the defects in her complaint.”

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