Who is a Joint Employer?

For the first time in nearly 60 years, the Department of Labor has updated the meaning of a “joint employer” pursuant to the Fair Labor Standards Act (“FLSA”). This update is significant when it comes to determining who is responsible for ensuring you receive the appropriate benefits and compensation for your position.

Pursuant to the FLSA, employers must pay workers at least minimum wage, and also pay non-exempt workers overtime compensation for all hours worked in excess of 40 hours in any workweek. An employer is defined as “any person acting directly or indirectly in the interest of an employer in relation to an employee.”

Further – an employee can have one of more “joint employers” who may both be responsible for any wage and hour violations. This means – where you have a joint employer (common examples include such as where a temp agency places you in a job, or where you work for a franchise) – either party potentially may be held responsible for breaches of the law. Under current law, both employers may be on the hook if they don’t act completely independently of each other – i.e. a franchise is beholden to the parent company for rules and regulations governing hiring, conduct or other job-related duties. However, this “complete disassociation” test has caused confusion among the courts. The new rule seeks to clarify this by setting forth numerous factors including:

1. Does the employer have the ability to hire or fire the employee?
2. To what degree does the employer supervise and control the employee’s work schedule or conditions of employment?
3. Who determines the employee’s rate and method of payment?
4. Which employer (or both) maintains the employee’s employment records?

The significance of each factor is determined on a case by case basis. Further, other specific factors such as operating as a franchisee/franchisor, providing forms and manuals, or requiring the potential joint employer maintain a certain business reputation are not relevant for the basis of determining joint employer status. Rather, the emphasis should be on issues of control of the employee.

The new rule is quite detailed and is designed to help ensure employers understand their responsibilities towards employees. If you have questions about your rights, or any wage and hour issue, it is important to speak to a skilled Atlanta wage and hour attorney.