We have an employee who works for two different companies with separate EINs (Employee Identification Numbers) but under common management–i.e. the same parent company–for insurance purposes. Can a combination of both salaries the employee earns be used to meet the exemption salary threshold requirements under the new overtime rule? The employee earns $30k at each company, for a total of $60k.
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If the two employers are considered joint employers under the Fair Labor Standards Act (FLSA), and assuming the employee’s job duties meet one of the exemption’s requirements, the employers may be able to aggregate the employee’s salaries to meet the new exemption salary threshold of $913 per week or $47,476 annually beginning December 1, 2016.
The FLSA recognizes the joint employment relationship and makes joint employers liable for minimum wage and overtime requirements. In addition, the FLSA regulations also state that when “discharging the joint obligation each employer may, of course, take credit toward minimum wage and overtime requirements for all payments made to the employee by the other joint employer or employers.” See 29 C.F.R. sec. 791.2(a).
According to the FLSA regulations, a determination of whether employment is to be considered joint or separate and distinct employment for purposes of the Act depends upon all the facts in the particular case. See 29 C.F.R. sec. 791.2(a).
However, when an employee’s work simultaneously benefits two or more employers, or the employee works for more than one employer at different times during the week, the arrangement usually is considered a joint employer relationship if: (1) the employers have arranged to share an employee’s services or to interchange employees; (2) one employer acts for the other employer in relationship to the employee; or (3) the employers have some association related to the employee and are considered to share control of the employee because one employer controls, is controlled by, or is under common control with the other employer. See 29 C.F.R. sec. 791.2(b).
Because this determination is fact specific and differs from employer to employer, you should consult with an attorney if further assistance is needed to assess whether your situation is considered joint employment under the FLSA.