It’s hard getting excited about joint employment.
In fact, it’s pretty yawn-inducing. (Seriously, get a cup of coffee before reading this.)
But a few weeks back, the Department of Labor issued some new guidance on the topic that has been making the rounds of the employment law blogs.
Now, you might be asking — what is joint employment? Well, I can dispel with the notion that it has to do with medical marijuana. Rather, the DOL has described two types of relationships and how the administrative interpretation (AI) plays into it:
Horizontal joint employment exists where the employee has employment relationships with two or more employers and the employers are sufficiently associated or related with respect to the employee such that they jointly employ the employee. The analysis focuses on the relationship of the employers to each other. ….
Vertical joint employment exists where the employee has an employment relationship with one employer (typically a staffing agency, subcontractor, labor provider, or other intermediary employer) and the economic realities show that he or she is economically dependent on, and thus employed by, another entity involved in the work. This other employer, who typically contracts with the intermediary employer to receive the benefit of the employee’s labor, would be the potential joint employer. Where there is potential vertical joint employment, the analysis focuses on the economic realities of the working relationship between the employee and the potential joint employer.
For the vast majority of employers, this guidance will have little impact. If you use mainly full or even part time staff, you may not have to worry about joint employer issues — you ARE the employer.
In some industries, like construction, hospitality, agriculture and janitorial work, there could be an impact. In some instances, a larger firm could be liable if a subcontractor did not pay its employees minimum wage or unemployment benefits. If you subcontract out a lot of work, the decision is a good reminder to review your agreements and review the tests that a court may use to rule on the issue.
Various law firms have been issuing guidance on this. One alert states:
The issuance of this AI should serve as a reminder to businesses that they need to think carefully about whether they may be viewed as joint employers over workers they do not consider to be their employees, even workers over whom they have little control. If they are likely to be considered joint employers, they need to consider whether they want to take steps to decrease this likelihood. For example, if two closely related entities concurrently make use of the services of certain employees, they may want to consider ending that approach. On the other hand, they may choose to accept the fact that they will be viewed as joint employers, identify the potential risks and liabilities that may result from joint employment, and decide in advance how they intend to minimize and allocate those risks, such as through an indemnification agreement.
Companies involved in intermediary worker engagements (e.g., staffing companies, subcontractors, and other intermediaries) will want to ensure, to the extent feasible, that they are not considered employers of each other’s employees.
I think that’s important to keep in mind. But remember that this isn’t exactly a new issue. I’ve been talking about joint employer issues for years — it’s just that we’re seeing some more publicity about it now.