Training & Compliance

Did You Know Your New Hire Might Make You a Joint Employer?

Earlier this year, the U.S. Department of Labor’s (DOL) Wage and Hour Division published an Administrator’s Interpretation addressing joint employment under the Fair Labor Standards Act (FLSA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA). They also released a new fact sheet on the Family and Medical Leave Act (FMLA) and joint employment.

By Susan Schoenfeld, JD, Senior Legal Editor

The new guidance from the DOL identifies common scenarios in which two or more employers jointly employ an employee and are, as a result, jointly liable for compliance. The interpretation and fact sheet compile statutory provisions, regulations, and case law to provide comprehensive guidance on joint employment under FLSA, MSPA, and FMLA so that employers can properly analyze a potential joint employment scenario.

The FMLA and Joint Employment

Joint employment exists when an employee is employed by two or more employers such that the employers are responsible for compliance with the FMLA. The analysis for determining joint employment under the FMLA is the same as under the FLSA.

Joint employment exists where two or more employers benefit from the employee’s work and are sufficiently related to or associated with each other. For example:

  • The employers have an arrangement to share the employee’s services;
  • One employer acts in the interest of the other in relation to the employee; or
  • The employers share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.

The focus of joint employment is the degree of association between the employers. For example, joint employment may exist where an employee works for two restaurants that are technically separate but have the same managers, jointly coordinate the scheduling of the employee’s hours, and both benefit from that employee’s work.

In these cases, it is important to consider facts that shed light on the degree of association between the employers and how the employers may jointly control the employee. Although not all or even most of these facts need to be present for there to be joint employment, some facts to consider include:

  • Who owns or operates the possible joint employers?
  • Do the employers have any overlapping officers, directors, executives, or managers?
  • Do the employers share control over operations?
  • Are the operations of the employers intermingled?
  • Does one employer supervise the work of the other?
  • Do the employers share supervisory authority over the employee?
  • Do the employers treat the employees as a pool of workers available to both of them?
  • Do they share clients or customers?
  • Are there any agreements between the employers?

Joint employment is important in determining employer coverage and employee eligibility under the FMLA. Joint employers’ responsibilities under the FMLA vary depending on whether they are the primary or secondary employer of the employee taking FMLA leave.

Employer Coverage and Employee Eligibility Under The FMLA

According to DOL’s recently released fact sheet, employees who are jointly employed by two employers must be counted by both employers in determining employer coverage and employee eligibility under the FMLA, regardless of whether the employee is maintained on one or both of the employers’ payrolls.

For purposes of employee eligibility, in determining whether a jointly employed employee works at a worksite where the employer employs at least 50 employees within 75 miles, the employee’s worksite is the primary employer’s office from which the employee is assigned or to which the employee reports. However, if the employee has physically worked for at least 1 year at a facility of a secondary employer, the employee’s worksite is that location.

Responsibilities of Primary Employers

Under the FMLA, the primary employer is responsible for:

  • Giving required notices to its employees;
  • Providing FMLA leave;
  • Maintaining group health insurance benefits during the leave;
  • Restoring the employee to the same job or an equivalent job upon return from leave;
  • Not interfering with a jointly employed employee’s exercise of or attempt to exercise his or her FMLA rights;
  • Refraining from firing or discriminating against an employee for opposing a practice that is unlawful under the FMLA; and
  • Keeping all records required by the FMLA with respect to primary employees.

A primary employer must meet all of its obligations under the FMLA even when a secondary employer is not in compliance with the law or does not provide support to the primary employer in meeting these responsibilities.

Tomorrow we’ll take a look at the responsibilities of the secondary employer.