Employment relationships are changing. Those changes have turned traditional assumptions about employment relationships upside down. I have written before about the phenomenon of some employers having more than one person or entity employing them at the same time, often for the same job. That is known as joint employment or co-employment. (Click here and here for a bit of review.) This past summer we heard a lot from the National Labor Relations Board on the subject (Click here, here and here for some review of that.) Recently, the US Department of Labor got into the act, by issuing an Administrative Interpretation regarding joint employment under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), or AI-2016-1, which you can find here. Now, to be fair, a lot of the content in AI-201601 is not new. But some of it is, or at least puts a different spin on things. so we should learn what we can about it so that we can get a handle on how it impacts employers. We’ll start doing exactly that, after the jump…
Why did the DOL issue this new guidance? In the DOL’s words, “The growing variety and number of business models and labor arrangements have made joint employment more common. In view of these evolving employment scenarios, the Administrator believes that additional guidance will be helpful concerning joint employment under the … [FLSA], 29 U.S.C. 201, et seq., and the… [MSPA] 29 U.S.C. 1801, et seq. ” Now, for those who may have a more cynical view the AI provides the underlying rationale that allows the DOL to expand its reach and regulatory power. The main thrust of the AI is that the continuing change in the workplace structure exponentially increases the possibility of joint employment, and that employers need to be ready for that possibility–but let’s not get ahead of ourselves.
For those joining The EmpLAWyerologist for the first time, joint employment occurs when more than one person or entity has employment responsibilities toward one or more employees. In such cases, more than one entity will be held equally accountable for how it deals with the worker vis-a-vis certain employment laws and other legal principles. The DOL’s AI focuses on joint employment under the FLSA. Specifically, the AI tells us that when two or more entities are employers of the same employee(s) the hours worked by each worker are aggregated and considered as one employment, including –and perhaps especially–for calculating whether overtime pay is due. Joint employers are “jointly and severally” liable for any FLSA violations. That’s the legal-ese way of saying that the DOL can go after all the joint employers either together or pursue them separately for any FLSA violations. For example, if Ellen the Employee is jointly employed by Company A and Company B and she is owed overtime pay, the DOL can go after one of them for the whole amount or both of them at the same time for all the overtime owed. If the DOL were to pursue Company A, then Company A can then attempt to recover at least some of that amount from Company B.
The AI really has two main parts. In the first part the DOL posits and supports its assertion that the FLSA and the MSPA broadly define joint employment — thus allowing the DOL to justify its increased presence in your lives. Let’s see what the DOL has to say there.
How do we know that the FLSA and MSPA govern a broad scope of employment relationships? The AI cites the following: a) the FLSA’s circular ( and largely unhelpful) definition of “employee” as “any individual employed by an employer”; b) the slightly less circular definition of “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee”; and c) the FLSA’s statement that “employ” “includes to suffer or permit to work”. Per US v Rosenwasser 323 U.S. 360, 363 n.3 (1945) (quoting statement of Sen. Hugo Black, 81 Cong. Rec. 7657 (1938)) this is “the broadest definition that has ever been included in any one act”. The MSPA defines these terms in the same way as the FLSA. Next, the AI continues, the FLSA regulations explicitly state that a worker may be “an employee to two or more employers at the same time.” 29 C.F.R. 791.2(a). Similarly, the MSPA essentially incorporates the FLSA’s statements about joint employment.
The DOL’s bid to effectively broaden the scope of joint employment rests in large part on the “suffer or permit to work” definition of employment. Why is that? The common law definition rests on amount of control the person/entity exercises over the worker. “Suffer or permit” is broader and potentially covers many relationships by considering the economic realties of the relationship between the workers and the potential employer. If an entity benefits from work performed by a worker, if the worker is economically dependent on that entity, even if the common law definition is not met, that entity may well be an employer, and, very likely, shares joint employment responsibilities with another entity toward the worker. So to sum up: a) person can be employed by more than one person/entity; and b) the category of employment relationships is very broad; and therefore c) joint employment is and should be a broadly defined category, covering relationships that under common law employment and agency principles would not otherwise be covered.
These expansive definitions, and the DOL’s expansive application of them “ensures that the scope of employment relationships and joint employment under the FLSA and MSPA is as broad as possible.”
OK, great, but what if any practical guidance does the AI provide for determining when and how one might be a joint employer? The next part of the AI, discusses the types of joint employment, the factors considered in making a determination and some examples. Come back next week so we can discuss that. See you then.
Disclaimer: Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
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