On October 20, 2015, the U.S. Department of Labor (DOL) issued new guidelines
to determine when companies are considered to be joint employers under
the Fair Labor Standards Act (FLSA). Whether an employee has more than
one employer is important in determining employees' rights and employers'
obligations under FLSA. The DOL noted that it has been increasingly focusing
on situations where it is possible that more than one employer is benefitting
from an employee's work. In that regard, the DOL has found that businesses
are changing their organizational and staffing models by sharing employees
or using third-party management companies, independent contractors and
staffing agencies and therefore the traditional employment relationship
of one employer employing one employee is becoming less prevalent.
Among other things, the new guidelines provide comprehensive guidance on
joint employment and emphasize that when two or more employers jointly
employ an employee, the employee's hours worked for all of the joint
employers during the work week are combined 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
separately liable for compliance with wage and hour laws.
The guidelines focus on the concepts of "horizontal" and "vertical"
joint employment. Generally speaking,
horizontal joint employment exists where the employee has employment relationships with two or more
employers and the employers are "sufficiently associated or related"
with respect to the employee and are therefore deemed to be joint employers.
This analysis focuses on the relationship of the employers to each other.
Examples of horizontal joint employment may include separate restaurants
that share economic ties and have the same managers controlling both restaurants,
a waitress working for two separate restaurants that are operated by the
same entity, or home health care providers that share staff and have common
Vertical joint employment exists where the employee has an employment relationship with one employer
(typically a staffing agency, sub-contractor or other intermediary employer)
and the economic reality shows that he or she is economically dependent
on, and thus employed by, another entity involved in the work. Unlike
horizontal joint employment cases, where the association between the potential
joint employers is the focus, the vertical joint employment analysis instead
focuses on the economic realities of the relationship between, for example,
the construction worker and the general contractor, to determine whether
the employees are economically dependent on both potential joint employers.
Other examples of vertical joint employment might be nurses placed at
a hospital by staffing agencies; an employer hires laborers through a
third party labor contractor; or garment workers employed by a contractor
who has contracted with a manufacturer to perform a specific function
such as stitching pieces of cloth.
According to the guidelines, whether to apply a horizontal or vertical
joint employment analysis (or both) depends upon the circumstances of
each case. It is also important to note that the issue of joint employment
may be relevant with respect to laws such as the Affordable Care Act and
the FMLA. The bottom line is that the DOL's guidelines provide that
it will consider joint employment to "achieve statutory coverage,
financial recovery, and future compliance, and to hold all responsible
parties accountable for their legal obligations."
Should you have questions on this or any other employment law matters,
please contact Mr. Kimler at 516.437.4385 x122 /
firstname.lastname@example.org. Mr. Gefen at 516.437.4385 x119 /