By:
Chris M. Mason
The Department of Labor (DOL) continues to make
dramatic changes to what we know and understand of minimum wage and overtime
requirements. This time, in January of
2016, the DOL’s Wage & Hour Division (WHD) issued an Administrator’s
Interpretation (AI), AI No. 2016-1, providing guidance on the subject of joint
employment under the Fair Labor Standards Act (FLSA) and the Migrant and
Seasonal Agricultural Worker Protection Act (MSPA). The guidance in this AI signals potentially
dramatic employer risks.
Today’s evolving workforce presents a plethora of
staffing options not as routinely used in the past. Third-party staffing companies, management
companies, professional employer organizations, and independent contractors all
present a variety of staffing options for contemporary workplaces. Companies on both ends of this arrangement –
those that lend and those that borrow workers – may be deemed joint employers,
as this signaled by the WHD’s recent AI.
According to WHD AI No. 2016-1, these relationships
will be reviewed for both horizontal and vertical joint employment. Horizontal joint employment exists when two
or more businesses that are associated with, or related to each other, both
separately employ the same individual.
This might be seen, for instance, when two separate restaurants with
common ownership employ the same waiter on different days of the week. Conversely, an employee who works directly
for one employer but who is also economically dependent on another organization
working in collaboration with the employer, might find himself or herself in a
vertical joint employment relationship.
For instance, an employee hired by a construction subcontractor may be
considered in certain circumstances to be a joint employee of the general
contractor on the project.
AI No. 2016-1 provides some guiding questions for
concerned enterprises, but also foreshadows the demanding expectations we are
likely to see from the WHD when it comes to joint employment evaluations and
determinations:
·
who owns the potential joint employers
(i.e., i.e., does one employer own part or all of the other or do they have any
common owners);
·
do the potential joint employers have
any overlapping officers, directors, executives, or managers;
·
do the potential joint employers have
control over operations (e.g. hiring, firing, payroll, advertising, overhead
costs);
·
are the potential joint employers’
operations inter-mingled (for example, is there one administrative operation
for both employers, or does the same person schedule and pay the employees
regardless of which employer they work for);
·
does one potential joint employer
supervise the work of the other
·
do the potential joint employers share
supervisory authority for the employee;
·
do the potential joint employers treat
the employees as a pool of employees available to both of them; and
·
do the potential joint employers share
clients or customers;
·
are there any agreements between the
potential joint employers.
For those enterprises that are deemed joint
employers, both may face liability for minimum wage and overtime pay
requirements, and can face much greater liability under countless other labor
and employment laws applicable to joint employers.
To read the complete AI, click here. If you work through a staffing enterprise or
PEO, or if you share workers directly with other operations, we encourage you
to seek experienced labor and employment counsel to ensure that you are
compliant with applicable law.
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Chris M. Mason is a labor and employment law attorney at Jennings, Strouss & Salmon, P.L.C. He counsels employers and management on all aspects of labor and employment law, including traditional labor matters, such as collective bargaining and union organizing; restrictive covenants; employment discrimination; sexual harassment; whistleblowing; retaliation; wrongful termination; personnel policies; reductions in force; trade secrets; restrictive covenants; duty of loyalty; drug and alcohol testing; and other state and federal laws, rules, and regulations. He is also an experienced litigator, representing clients in Arizona, federal, and appellate courts, as well as before administrative agencies, including the National Labor Relations Board, the Department of Labor, the Equal Employment Opportunity Commission, the Arizona Civil Rights Division, and the Department of Economic Security.
