August 25, 2025|Publications
August 25, 2025 | United States District Court for the Eastern District of Missouri | Slip Opinion
Executive Summary
In a slip opinion following remand from the Eighth Circuit, Judge Henry Edward Autrey of the Eastern District of Missouri denied summary judgment in favor of Levering Regional Health Care Center and its management company, Reliant Care. The Department of Labor alleged violations of the Fair Labor Standards Act (FLSA) tied to automatic meal break deductions. Although Levering was the direct employer of nursing staff, the Department sought to hold Reliant Care liable as a joint employer. While the Eighth Circuit has not articulated a specific test for joint employment, the district court applied the economic realities framework commonly used in the circuit, considering whether Reliant Care exercised meaningful control over hiring, supervision, pay, and records. The court concluded there was sufficient evidence for a jury to find Reliant Care jointly responsible given its role in creating wage and hour policies, processing payroll, setting salaries, approving bonuses, and overseeing compliance. The ruling preserves the Department’s joint employer theory and ensures the case will proceed to trial.
Relevant Background
Levering operates a residential health care facility in Missouri, while Reliant Care is a management company providing business services to Levering and other facilities. Under a management services agreement, Reliant Care supplied Levering with legal advice, HR support, payroll administration, accounting, compliance oversight, and other back-office functions. The agreement specified that Levering’s employees were to be employed and paid exclusively by Levering, and that Levering retained responsibility for daily operations.
Despite this contractual separation, the factual record revealed substantial Reliant Care involvement. Reliant Care recruited the leadership team at Levering and retained hiring authority for the facility’s Administrator, though nursing staff were hired locally by Levering’s Administrator, Director of Nursing, and HR Manager. The Administrator testified she reported directly to Reliant Care’s executives, who advised on policies including wage and hour compliance. Reliant Care created the missed meal break policy at issue and trained Levering’s HR personnel on its implementation. Reliant Care also provided orientation and ongoing compliance training, established a compliance hotline monitored by its corporate office, and embedded nurse advisors and other members of its traveling management team who at times assisted with supervisory duties during staffing shortages.
On the financial side, Reliant Care processed Levering’s payroll, maintained payroll and benefits records, determined employee benefit offerings, and was involved in approving discretionary bonuses. There was evidence that Reliant Care set or recommended salaries and oversaw wage increases, including adjustments during the COVID-19 pandemic. Although Levering’s local managers controlled scheduling and day-to-day direction of staff, Reliant Care monitored hours worked through budgetary reports to ensure departments remained within corporate targets. Reliant Care also drafted disciplinary policies applicable to Levering employees, even if final disciplinary decisions were carried out locally.
The Department of Labor’s suit alleged that employees routinely worked through unpaid meal breaks, that supervisors were aware of this practice, and that Reliant Care’s policies and oversight contributed to the failure to compensate employees properly. Against this backdrop, Reliant Care sought summary judgment, arguing it was not the employer of Levering’s nursing staff.
Decision
The district court applied the “economic realities” test, long recognized in joint employment cases, noting that an employee may have more than one employer concurrently liable under the FLSA. Citing Falk v. Brennan, 414 U.S. 190 (1973), the court emphasized that technical labels in contracts are not controlling, and that the true measure is the degree of control exercised. Within the Eighth Circuit, courts typically consider four non-exclusive factors: whether the alleged employer had the power to hire and fire; whether it supervised and controlled schedules or conditions of employment; whether it determined the rate and method of payment; and whether it maintained employment records. See Childress v. Ozark Delivery of Missouri, 95 F. Supp. 3d 1130, 1139 (W.D. Mo. 2015).
Turning to the first factor, the court acknowledged that Reliant Care had limited formal hiring authority—direct control over only the facility Administrator—but nonetheless played a role in recruiting leadership and writing disciplinary policies that governed the employment relationship. These policies, even if enforced locally, originated from Reliant Care and could result in termination, indicating some level of hiring and firing influence.
On the second factor, supervision and control of schedules or conditions of employment, the court agreed that Levering’s local managers set daily schedules, but found Reliant Care influenced conditions in meaningful ways. Reliant Care embedded a nurse advisor who trained staff and sometimes acted in supervisory roles during staffing shortages, and it monitored daily hours through corporate reporting to ensure budget compliance. Reliant Care also created the missed meal break policy and directed employees to contact its HR executives with questions, thereby involving itself in the very conditions of employment at issue in the litigation.
The third factor, determination of wages and benefits, strongly supported joint employer status. Evidence showed Reliant Care set salaries, approved wage increases during the pandemic, controlled bonus approvals, and determined benefits packages. Reliant Care’s role in shaping and approving compensation was central to the economic reality of the employees’ relationship with the company.
The fourth factor, maintenance of records, also favored joint employment. Reliant Care processed Levering’s payroll, maintained payroll and benefits data, and kept employment records at its offices or offsite. By controlling the systems through which compensation was processed and tracked, Reliant Care positioned itself as more than an arms-length service provider.
The court concluded that each of these factors pointed to Reliant Care’s meaningful role in the employment relationship, and that a reasonable jury could find Reliant Care to be a joint employer alongside Levering. In so holding, the court drew parallels to Childress, where an HR contractor’s control over policies, benefits, and payroll supported joint employer status despite day-to-day supervision remaining with the primary employer. The court emphasized that the same reasoning applied here, perhaps even more strongly, given Reliant Care’s direct involvement in setting wages.
Looking Forward
The decision underscores how courts may find joint employer liability even when a management company does not directly hire or supervise frontline employees. Evidence of policy creation, wage setting, payroll control, and compliance oversight may be enough to bring an entity within the FLSA’s broad definition of “employer.” For franchisors, this reasoning may have particular resonance, as franchisors often provide systemwide policies, compliance guidance, and operational oversight while attempting to avoid being deemed the employer of franchisee staff. This case illustrates that when those policies extend into wages, hours, or working conditions, courts may conclude there is sufficient control to survive summary judgment. While the outcome remains to be decided at trial, the ruling reflects a judicial willingness to look past contractual disclaimers and assess the substance of the relationship, a reminder that the boundaries of joint employment remain a live and evolving risk for franchisors and employers alike.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
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