You may not think you’re a joint employer, but according to the DOL’s latest guidance on the subject, you may very well hold that designation — and there are some very important FLSA and FMLA implications you need to be aware of.
First, the FLSA implications. The DOL tackled this subject by releasing an Administrator’s Interpretation on when it considers two businesses to be joint employers – a designation that makes both simultaneously responsible for FLSA compliance.
The DOL’s move was likely sparked by the NLRB’s recent take on joint employers as well as its own focus on protecting employees in “fissured workplaces” where more than one firm benefits from a staffer’s work.
The major takeaway from the Interpretation is this: The DOL’s standard is likely to apply to plenty of employers that don’t consider themselves joint employers right now.
One example that jumps right out is employers that rely on staffing agencies. Even if your company uses a staffing company to supply you with employees on a temporary basis, it’s likely to be a joint relationship if any of the following occur:
- your company handles payroll for workers, sets their hours and schedule, or is involved in hiring/supervising the employee, and/or
- the employee works on your premises and/or does work that is integral to your business.
Basically, if temp workers are integral to your business or you’re setting their hours, you’re just as responsible for paying these workers as the staffing company they work for under the FLSA.
The DOL considers this an example of vertical joint employment.
Different companies, common operations
In addition to vertical employment, the feds’ guidance covered horizontal joint employment.
This relationship occurs when multiple entities are organized as different companies but share business operations. If the separate companies share common managers or employees and/or have their payroll and scheduling handled by one of the companies, chances are the DOL will consider the companies to have a joint horizontal relationship in place.
If you’re wondering if there are any relationships that don’t actually constitute joint employment, there are.
According to the DOL, hiring a contractor to perform work that isn’t integral to your business (e.g., maintenance) isn’t a joint relationship. Of course, it could easily become one if the company controls how the work is performed.
In Fact Sheet #28N, the DOL focused specifically on joint employers’ responsibilities under the FMLA.
For FMLA purposes in joint employer situations, one employer is the “primary” employer and the other is the “secondary” employer. And according to the DOL, “determining whether an employer is a primary or secondary employer depends on the facts of the situation,” such as the ability to hire, fire or assign work.
Most of the FMLA responsibilities – providing FMLA notices, determining eligibility, etc. – will rest with the primary employer, although the secondary employer has responsibilities and can be held responsible for compliance issues.
The DOL Fact Sheet includes a chart comparing the responsibilities of the primary and secondary employers under the FMLA.