In an effort to clarify the circumstances that may create a joint-employment relationship, the U.S. Department of Labor issued an Administrator’s Interpretation this week. This Administrator’s Interpretation, which can be found at this link, analyzes joint employment under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act.
Joint employment may occur under various circumstances; for example, where separate entities share employees, or where one entity uses a third-party management company, staffing agency or labor provider. The National Labor Relations Board ruled last year that a franchisor may also be considered a joint employer of a franchisee’s employees in some circumstances. According to the Administrator’s Interpretation, “the possibility that a worker is jointly employed by two or more employers has become more common in recent years.”
The question of whether one entity is the joint employer can be critical in cases where an employee files an administrative claim or a lawsuit alleging some type of unlawful employment practice; for instance, unpaid overtime in violation of the FLSA. If joint employment is found in such a case, the employee may be able to obtain recovery from either or both of the joint employers; e.g., the entity that directed the work, or the staffing agency that dispatched the employee, or both.
The Administrator’s Interpretation advises that “the possibility of joint employment should be regularly considered” to ensure compliance with the FLSA. It “particularly” recommends taking such possibilities into consideration “where (1) the employee works for two employers who are associated or related in some way with respect to the employee; or (2) the employee’s employer is an intermediary or otherwise provides labor to another employer.”
Therefore, individuals or entities who are concerned that they may be considered a joint employer should review the Administrator’s Interpretation and consult legal counsel to discuss options to reduce their exposure to liability.