Here’s Wikipedia’s
definition of joint employment:
Joint employment, or co-employment, is the sharing of
control and supervision of an employee’s activity among two or more business
entities.
Pretty simple, right?
Most employment lawyers will tell you that it’s not that simple, and
that there are significant legal issues that can arise when workers are jointly
employed.
The concept of joint employment has been around for a long
time, but in the last nine months, both the National
Labor Relations Board and the Department of
Labor have issued new guidance on the subject. These new interpretations have sparked criticism
and legislative
action. Even with new guidance
available, joint employment remains a mystery for many employers, in part
because an organization could be a joint employer without even knowing it.
In his Administrator’s Interpretation,
Wage and Hour Administrator David Weil described various situations that can
lead to joint employment. The first is
the so-called “horizontal”
joint employment where two (or more) entities are working on a project
together, employees work side-by-side, and the two entities are “sufficiently
associated with or related to each other” so that the employee may receive
direction from both. Imagine two
restaurants across the street from one another, one Mexican the other
Italian. The restaurants are managed by
the same management company and share some of the same upper-level managers,
but have wait staff employed only by one restaurant or the other. Because of staffing shortages, wait staff move
back and forth between the restaurants to fill shifts. Under Weil’s interpretation, this is a
horizontal joint employment situation.
If a server works 40 hours at one restaurant and 10 at the other during
the same workweek, he would be entitled to overtime under the FLSA and both
restaurants would be liable for the overtime payment, as well as statutory
damages and attorneys’ fees if there’s a dispute.
Another type of joint employment is known as “vertical”
joint employment. In this case, one company contracts with another to provide
workers. The company seeking help often uses a staffing company, believing that
the staffing company remains the employer while the contracting company
provides the specific project or tasks.
Under Weil’s interpretation and the NLRB’s
“indirect” control test, both the staffing company and the contracting
company would be joint employers, liable for claims brought by the workers.
Other joint employment relationships can arise when a
parent company controls the work of a subsidiary’s employees, when
employees are affected by a merger or acquisition, or between a franchisor
and franchisee.
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Here are some of the questions employers should ask in order to understand and manage their risk of joint employer liability:
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Who are the workers we control and direct, regardless of where they work? Who manages them, and who pays them?
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If our employees work with another employer’s managers and supervisors, do we understand and approve of the other employer’s policies and practices?
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Who controls and directs the workers in our workplace? If control and direction comes from outside our organization, do we understand and approve of the policies and practices imposed on the workers in our workplace?
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If we use a staffing agency, what does our agreement with that agency say about liability for employment law violations?
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If we use a staffing agency, do we approve of the agency’s policies and practices? Are we sure that those policies and practices comply with the law?
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If we are a franchisor or franchisee, what does our franchise agreement say about liability for employment law violations? What does it say about control and direction of employees?
Any of these questions may lead to more questions, given
the complicated nature of joint employment.
If they do, we recommend that you seek guidance from in-house or outside
counsel.
Posted by Judy Langevin and Kate Bischoff
