Guidance Tied to Fair Labor Standards Act (“FLSA”) and Migrant and Seasonal Agricultural Worker Protection Act
DO YOU KNOW WHO YOU SHARE YOUR EMPLOYEES WITH?!?
You could find yourself liable for the conduct of another employer if you are not careful.
Let’s face it: Changes in the economy have changed the structure of workplaces. More and more, the possibility that a worker is jointly engaged by two or more employers has become important to understand in recent years. What’s more, there are also concepts such as “horizontal” and “vertical” joint employment relationships to consider and the DOL recognizes both of them.
In Administrator’s Interpretation No. 2016-1 dated January 20, 2016 the DOL made clear its expectation that the employers in Joint Employment relationships must comply with the FLSA and other laws enforced by the agency.
Horizontal Joint Employment
Horizontal Joint Employment may exist when two (or more) employers each separately employ an employee and are sufficiently associated with or related to each other with respect to the employee. See 29 C.F.R. 791.2. In a possible horizontal joint employment situation, there is typically an established or admitted employment relationship between the employee and each of the employers, and often the employee performs separate work or works separate hours for each employer. Thus, the focus of a horizontal joint employment analysis is the relationship between the two (or more) employers.
DOL identifies the facts as relevant when analyzing the degree of association between, and sharing of control by, potential horizontal joint employers:
- who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have any common owners);
- do the potential joint employers have any overlapping officers, directors, executives, or managers;
- do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs);
- are the potential joint employers’ operations inter-mingled (for example, is there one administrative operation for both employers, or does the same person schedule and pay the employees regardless of which employer they work for);
- does one potential joint employer supervise the work of the other;
- do the potential joint employers share supervisory authority for the employee;
- do the potential joint employers treat the employees as a pool of employees available to both of them;
- do the potential joint employers share clients or customers; and
- are there any agreements between the potential joint employers?
Vertical Joint Employment
Vertical Joint Employment inquiry focuses on whether the employee of the intermediary employer is also employed by another employer – the potential joint employer. In vertical joint employment situations, the other employer typically has contracted or arranged with the intermediary employer to provide it with labor and/or perform for it some employer functions, such as hiring and payroll. Because it is an employment relationship analysis under the FLSA, the vertical joint employment analysis must be an economic realities analysis and cannot focus only on control.
The seven factors are:
1. Directing, Controlling, or Supervising the Work Performed
2. Controlling Employment Conditions
3. Permanency and Duration of Relationship
4. Repetitive and Rote Nature of Work
5. Integral to Business
6. Work Performed on Premises
7. Performing Administrative Functions Commonly Performed by Employers (See 29 C.F.R. 500.20(h)(5)(iv).)
According to DOL: “As a result of continual changes in the structure of workplaces, the possibility that a worker is jointly employed by two or more employers has become more common in recent years. In an effort to ensure that workers receive the protections to which they are entitled and that employers understand their legal obligations, the possibility of joint employment should be regularly considered in FLSA cases, particularly where (1) the employee works for two employers who are associated or related in some way with respect to the employee; or (2) the employee’s employer is an intermediary or otherwise provides labor to another employer.”
THE POINT TO KEEP IN MIND: Where joint employment is established, the employee’s work for the joint employers during the workweek “is considered as one employment,” and the joint employers are jointly and severally liable for compliance, including paying overtime compensation for all hours worked over 40 during the workweek. 29 C.F.R. 791.2(a).