Joint Employment Relationships – Employers Beware!

Joint EmploymentTemporary agency workers, leased workers, and independent contractors provide organizations with optional or additional sources for workers. While these options offer flexibility, they can also create liability that may not be readily apparent.

Increasingly, courts and administrative agencies evaluate whether multiple companies are “joint employers,” meaning that they are jointly and individually responsible for an employment-related violation.

Although the definition of “joint employer” may differ, it can exist under virtually any employment law. For example, according to the federal regulations for the Family and Medical Leave Act (FMLA), when an employee “performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the week, a joint employment relationship generally will be considered to exist … .” The U.S. Department of Labor describes scenarios that typically give rise to a joint-employment relationship, including:

  • Where there is an arrangement between employers to share an employee’s services or to interchange employees;
  • where one employer acts directly or indirectly in the interest of the other employer in relation to the employee; or,
  • where the employers are not completely disassociated with respect to the employee’s employment and may be deemed to share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.

With respect to the FMLA, joint employment has important consequences for companies in terms of coverage. A company that employs 30 employees and leases 20 more through a temp agency may be surprised to learn that all 50 are entitled to time off under the Act. Worse, employees erroneously terminated who should have been granted leave may have an impressive array of claims against the unsuspecting employer.

The Fair Labor Standards Act (FLSA) is equally unforgiving. Under the FLSA, joint-employment principles can determine whether an employee working 30 hours a week for two different employers is really working 60 hours a week for one employer and is thus entitled to overtime. These principles can also bear on whether an employee is properly classified as exempt or non-exempt.

Given the potential for liability and ambiguity associated with joint-employment relationships, it is important that employers clearly understand their nature.  MSEC attorneys are available to help organizations assess such relationships and identify potential legal risk. Alicia Williams, an MSEC attorney, will be speaking on joint-employment relationships at the upcoming MSEC Employment Law Update Conference, beginning in Denver on May 5, 2015 (see the MSEC website for information).  If we can answer any questions or provide any assistance regarding joint employment liability risk issues or any other human resources or employment law issues, call us first.