Your organization may be in compliance with wage and hour laws, but are your “joint employers” in compliance? If they’re not, you could end up liable.
Two or more employers may be deemed to be “joint employers” of an employee under the FLSA. If either employer violates the FLSA, they will both be liable. Some specific examples of a joint employment relationship include when:
- Two or ore employers have an arrangement to share the employee’s services
- One employer acts directly or indirectly in the interest of the other employer in relation to the employee.
- The employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer
However, the mere fact that an employee works for both you and another employer does not make you joint employers. You will be joint employers only if:
- The employers aren’t acting entirely independently of each other
- The two jobs aren’t “completely disassociated” from each other
When an employee performs separate services for joint employers in the same workweek, both employers have to count the total number of hours worked in determining whether the employee is entitled to overtime. For example, if an employee works 30 hours for one employer and 20 hours for a joint employer in the same workweek, both employers will be responsible for the 10 hours of overtime worked. (Only 10 hours overtime premium need be paid in all.)
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Example:
Lizzie owned a home health care company. She bought another company that also provided home health care, after which both companies remained as separate legal entities. The former owner of that business stayed on as manager, and the two companies employed many of the same workers.
Eight nurses who worked for both companies complained that they had been denied overtime because they didn’t work more than 40 hours per week for either company. Typically, one of the nurses would work 35 hours for one company and 30 hours for the other, but no overtime.
The nurses were jointly employed by the two companies because their employment with the original company was not completely disassociated from their employment with the company Lizzie had bought. As joint employers, the two companies were jointly liable for the nurses’ unpaid overtime.
Note that under a joint employer relationship, if one of the employers goes under, the other will be responsible for any FLSA violations the first company may have committed.
Classic Example: Temporary Staffing
The classic example of joint employment is a temporary staffing arrrangement. Temporary employees are usually hired and paid by a temporary staffing agency, but are also subject to control by the employer to which they are assigned. Thus, DOL has stated that employees of a temporary staffing agency are jointly employed by both the agency and the establishment to which they are assigned.
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Example:
Eugenia recently graduated from community college and started job hunting. When she ran into trouble finding the right job, she decided to seek temporary work from Total Staffing. Total placed her in an accounts receivable position at Best Pest Control.
In addition to giving her the job assignment, Total pays Eugenia on a biweekly basis, withholds taxes from her paycheck, provides unemployment and workers’ compensation coverage, and has the authority to fire her.
Bet Pest directs Eugenia’s daily work activities, supervises her work, controls her working conditions, and determines the length of her work day.
Eugenia is jointly employed by total Staffing and Best Pest. Both companies are responsible for complying with FLSA’s overtime provisions, and if there is a violation of the act, both will be liable.
In tomorrow’s Advisor, minimizing joint liability, plus an introduction to the just-revised “Wage and Hour Bible.”