Twenty-six garment workers who worked in a factory in New York City’s Chinatown sued six contractors that used the factory and an apparel manufacturer for violations of the Fair Labor Standards Act and state law. Because the contractors could not be located or had ceased doing business, the plaintiffs sought damages only from the manufacturer (“Liberty Apparel”). The manufacturer sub-contracted the last phase of the production process to the contract firms, relying on them to do the assembly work of stitching, sewing, cuffing, and hemming the garments. The garment workers were paid a piece rate for their labor.

1.) What is the legal issue in this case? What did the appeals court decide?

2.) What criteria had the district court applied to determine whether the manufacturer was an employer of the garment workers? What additional criteria does the appeals court say must be applied? How do these criteria help determine whether an employment relationship exists?

3.) From the limited, disputed facts presented, how would you decide the case?

4.) What are the practical implications of this case? For workers who are victims of unscrupulous contractors? For firms that subcontract or otherwise outsource parts of their operations?