Employment & Labor Law Client Alert - February 2016

1. Brief Overview

   When an employee works for two or more employers the potential for a joint employer relationship arises. Joint employment has significant consequences such that employers should determine at the outset of their employment relationships how the relationship will likely be characterized in order to accurately predict exposure and ensure statutory compliance.

   Despite the significance of joint employer status, it is often difficult to ascertain when a joint employment relationship has been created. There is no bright line rule and courts apply different standards and evaluate different factors. Recognizing both the importance of the question and the difficulty of accurately coming to the answer, the U.S Department of Labor Wage and Hour Division recently published Administrator's Interpretation No. 2016-1 (the "Administrator's Interpretation") to guide employers through the joint employer analysis under the federal Fair Labor Standards Act ("FLSA") and the Migrant and Seasonal Agricultural Worker Protection Act ("MSPA"). The Administrator's Interpretation provides a rubric under which to evaluate any employment relationship.

2. Consequences of Joint Employment

   Today's employers engage in countless business models and different employment relationships. The classic single employer, single employee relationship is less common. Instead employers obtain employees from staffing agencies, work with labor contractors to fill their needs, share employees amongst business, and engage in other creative employment relationships. Under the FLSA and the MSPA, when multiple employers are joint employers, the employee's hours worked for both employers are combined and considered a single employment. This characterization is used to calculate overtime violations.

   For example, if an employee works 25 hours in one week for one employer and 25 hours in the same week for her other employer, she is entitled to 10 hours of overtime even though neither employer technically permitted the employee to work more than 40 hours. Additionally, as the name suggests, joint employers are jointly and severally liable for compliance with both the FLSA and the MSPA. In the example, each employer is responsible for the full 10 hours of overtime worked and the employee is entitled to collect the entire 10 hours of overtime from both employers or either employer. If one of the joint employers goes bankrupt, the employee is entitled to collect the entire amount from the solvent employer.

   Given these realities, employers should evaluate whether they are creating a joint employment relationship at the beginning of the relationship to fully understand their obligations and their potential liability.

3. Joint Employment Is Broadly Defined Under the FLSA and the MSPA

   Under the common law, joint employer relationships were determined solely by analyzing how much control each employer had over the employee in question. Antenor v. D & S Farms (1996) 88 F.3d 925, 933. However, the FLSA does not simply cite to control to define employment. Rather, the FLSA defines "employ" as "to suffer or permit work." 29 U.S.C. 203(g). This statutory definition has been called the "broadest definition that has ever...