Joint Employment

On January 20, the U.S. Department of Labor (DOL) issued an Administrator’s Interpretation on joint-employer status under the Fair Labor Standards Act (FLSA).

The Interpretation addresses employment scenarios in which an individual may be employed by more than one employer at the same time. This is not a new concept, but the Interpretation alerts employers that the DOL will apply the joint employer principles broadly to provide the fullest protection for employees. The Interpretation defines two joint employment models, identified generally as “horizontal” and “vertical.”

Horizontal joint employment occurs when more than one employer each separately employs an individual and where the employer entities are sufficiently associated with each other with respect to the employee. The DOL cited a number of relevant factors that it will consider in determining whether horizontal joint ownership exists, including the extent of common ownership of the employers, and whether there is shared management and shared control over operations such as hiring, firing, payroll, overhead, and one administrative operation for the employers.

Vertical joint employment exists where the employee has an employment relationship with one employer (the “intermediary employer” such as a staffing agency or subcontractor) and the economic realities show that the employee is economically dependent on, and thus employed by, another employer involved in the work. This other employer, who typically contracts with the intermediary employer to receive the benefit of the employee’s work, would be the potential joint employer. In determining whether vertical joint employment exists, the focus is on the employee’s relationship with the potential joint employer (the “other” employer). In the vertical circumstances, there is typically an established or admitted employment relationship between the employee and the intermediary employer. The employee’s work, however, is typically for the benefit of the other employer. The Interpretation cites seven “economic realities” factors for the vertical joint employment analysis; however, it cautions that the factors should not be considered mechanically or in a vacuum. Instead, they should be used as guides, and should be applied in a manner consistent with the ultimate inquiry and the “expansive” definition of employment under the FLSA. The seven factors are:

▪ Directing, controlling or supervising the work involved;

▪ Controlling employment conditions;

▪ Permanency and duration of the relationship;

▪ Repetitive and rote nature of the work;

▪ Integral to the business;

▪ Work performed on premises;

▪ Performing administrative functions commonly performed by employers.

The Interpretation asserts that the DOL will consider joint employment to achieve statutory (FLSA) coverage, financial recovery, and future compliance, and to hold all responsible parties accountable for their legal obligations. The Interpretation concludes with the statement:

“As with all aspects of the employment relationship under the FLSA…, the expansive definition of ‘employ’ as including ‘to suffer or permit to work’ must be considered when determining joint employment, so as to further the statute’s remedial purposes.”

This final statement leaves no doubt that the DOL will interpret the joint employment principle in its broadest sense when enforcing the FLSA.

Article written by John C. Fish, Esq. For more information, contact Mr. Fish at (607) 231-6712 or via email at jfish@hhk.com.

 

Recent Entries

©2017 HH&K Contact Us: 80 Exchange Street, P.O. Box 5250, Binghamton NY 13902-5250 | 607-723-5341 Terms of Use | Privacy Policy

ATTORNEY ADVERTISING  Prior Results Do not Guarantee a Similar Outcome