What is a Joint Employer?
The term “joint employer” refers to a situation in which an employee has two or more employers, who are jointly and separately liable for their wages under the Fair Labor Standards Act (FLSA). Examples of joint-employer situations are:
- Staffing agencies and their client/employers
- Contractors and subcontractors
- Franchisors and franchise owners
How Do I Determine If I am a Joint Employer?
On January 12, 2020, the U.S. DOL announced a final rule revising joint-employer status. It uses a four-factor balancing test to determine joint-employer status.
Whether directly or directly, a potential joint employer will exercise one or more of these control factors:
- They can hire or fire the employee;
- Supervise and determine the employee’s work schedule and/or conditions of employment to a substantial degree;
- Determine the employee’s rate of payment; and
- Maintain the employee’s records. (Maintenance of employment records alone does not demonstrate joint-employer status.)
No single factor alone may determine joint-employer status. The appropriate weight is given to each control factor and varies depending on individual circumstances. There are more clarifications and details regarding joint-employer status here.
How Can a Joint-Employer Status Impact My Payroll?
The joint-employer status may impact how you calculate overtime payments. For example, if an employee works for Employer A for 30 hours and Employer B for 20 hours, and those employers are considered joint employers, the employee qualifies for 10 hours of overtime pay.
Other Legal Considerations
If you are considered a joint employer, you can be held solely responsible for an injured worker and other legal, fiscal matters. We highly recommend you take steps to identify and address legal risks. If you are subscribed to our HR tools and services, you can speak with one of our professional HR representatives to make sure your business is protected.