Joint Employment

Author: Michael Cardman, XpertHR Legal Editor

When an employer shares the right to control an employee with another employer, there is the potential for joint employment, meaning each employer could be liable for the other's violations of employment laws. Joint employment has emerged as a growing risk in recent years. The rising use of third-party management companies, independent contractors, staffing agencies and labor providers has made joint employment findings more likely. At the same time, enforcement agencies like the US Department of Labor (DOL) and the National Labor Relations Board (NLRB) have issued expansive interpretations of joint employment and made it an enforcement priority to root them out.

There is no single definition of joint employment. Key terms like employment, employer, employee, and even work are defined differently under various employment laws. Courts and enforcement agencies have interpreted these terms in different ways, as well. In deciding whether two employers are joint employers, courts and enforcement agencies look not only at the relationship between the employers and the ostensible employee, but also at the relationship between the employers themselves. The analysis of the relationship between employer and potential employee is similar to the analysis done when determining whether a worker is an employee or an independent contractor. Factors such as the right to control the means and manner of the individual's work; the worker's investment in equipment, tools and facilities; and the worker's opportunity for profit or loss are often considered. The analysis of the relationship among employers considers things like how much the employers' management structure overlaps, whether they share services like payroll or recruiting, and the degree of shared ownership.

An employer can be held "jointly and severally liable" for any violations under the Fair Labor Standards Act, the National Labor Relations Act, the Family and Medical Leave Act, and other employment laws. As the DOL explains it, "[E]ach joint employer is individually responsible, for example, for the entire amount of wages due. If one employer cannot pay the wages because of bankruptcy or other reasons, then the other employer must pay the entire amount of wages; the law does not assign a proportional amount to each employer."

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