There exists already a doctrine of joint employer law under the Fair Labor Standards Act, Now, the USDOL wants to make it easier for two (or more) entities to be found as joint employers. The head of the Wage Hour Division, David Weil, stated that the new policy is required because of increasingly varied employment arrangements in today’s workplace.
This guidance follows on the heels of a recent NLRB decision holding that a company (Browning Ferris) and its contractor can be a joint employer (or a single employer) even if the company had not exercised control over employee terms and conditions of employment.
Mr. Weil observed that companies are increasingly sharing employees or using third-party management companies, independent contractors, staffing agencies or labor providers. Significantly, the Interpretation also applies to franchise operations, which are abundant on today’s employer/employment landscape. He observed that “through its enforcement efforts, the Wage Hour Division regularly encounters situations where more than one business is involved in the work being performed and where workers may have two or more employers.”
There are two types of joint-employment arrangements that are being targeted, or, more delicately put, examined. One of these is the “vertical joint employment,” which occurs when an employee has an employment relationship with one employer, e.g. a staffing agency or a subcontractor, but that employee remains economically dependent on, i.e. actually employed, by the other entity involved. The other entity, usually a company that has contracted to use workers sent by the staffing agency, would be looked to/at as the potential joint employer. The other scenario is “horizontal joint-employment.” Under that rubric, the employee has employment relationships with two or more employers that are only perhaps, on paper, separate, but that is the only difference, such as in the case of sister companies or affiliated companies.
When the DOL can go after two employers for the same liability, its chances of securing all the wages due the workers is greatly enhanced. Although there have been FLSA regulations in existence for decades on what is a “joint employer,” this new initiative, similar to the exemption and independent contractor “action” going on shows a greater enforcement posture and attitude by the agency.
As Mr. Weil so eloquently stated “where joint employment exists, one employer may also be larger and more established, with a greater ability to implement policy or systemic changes to ensure compliance.” This is, to me, another pro-employee endeavor by the agency, maybe before the election is held.