Joint employment is the term used to describe employment situation where a worker could arguably have more than one employer. A common scenario when this is an issue is in the world of labor contractors, such as often used in farm labor. A labor contractor would be the "employer" of the worker and issue the paycheck, while the farmer or manufacturing company actually directs the work and supervises the worker. Responding to the issues relating to what it perceives as a steady increase in the use of these schemes using third-party management companies, independent contractors, staffing agencies, etc. the Wage and Hour Division of the Department of Labor has recently issued a new interpretation of the issue as the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) apply. These schemes are often ways to avoid the hassles and potential legal issues involved in directly hiring workers, but as the DOL explains, they have the potential to create even more issues.
Here's an excerpt from the release:
"Whether an employee has more than one employer is important in determining employees' rights and employers' obligations under the FLSA and MSPA. It is a longstanding principle under both statutes that an employee can have two or more employers for the work that he or she is performing. When two or more employers jointly employ an employee, the employee's hours worked for all of the joint employers during the workweek are aggregated and considered as one employment, including for purposes of calculating whether overtime pay is due. Additionally, when joint employment exists, all of the joint employers are jointly and severally liable for compliance with the FLSA and MSPA. 4 Where joint employment exists, one employer may also be larger and more established, with a greater ability to implement policy or systemic changes to ensure compliance. Thus, WHD may consider joint employment to achieve statutory coverage, financial recovery, and future compliance, and to hold all responsible parties accountable for their legal obligations."
Thus, in the DOL's view, joint employers are responsible for the overtime requirements of the FLSA. Where there is potential "vertical joint employment" the economic realities of the working relationship between the worker and potential joint employer is very important. "Vertical" joint employment may occur in the context of the labor contractor or staffing agency described above; a "horizontal" joint employment relationship may occur in situations such as when a worker is employed at two different restaurants run by the same entity. In determining the nature of a potential horizontal joint employment relationship, the DOL describes analysis of the potential employers' relationship to each other as the focus. This is important, because, as quoted in the interpretation:
"In cases 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)."
Increased enforcement of labor regulations has likely led to an increase in the creative ways that companies and employers try to avoid regulations to increase profit margins. Hopefully, the DOL will continue to increase enforcement and make abuse of labor contractors, sub-contractor designations and the like unprofitable, evening the playing field for employers that follow the law and protecting the rights of our working men and women.