Are you a joint employer?

Are you an employer who uses temporary employees, staffing agencies or independent contractors?

Use of such contingent or contract workers is not unusual and may be necessary for your operations. If you are in that situation, 2017 might find you in the crosshairs of governmental agencies that want to treat you as a “joint employer.”

A joint employer relationship can arise in circumstances where an employee works for two entities that share control over how that employee performs their work. In addition to companies that use temporary employees, staffing agencies or independent contractors, joint employer status has been found in the context of franchisor-franchisee and contractor-subcontractor relationships. A number of federal agencies that investigate and regulate employers and the workplace have adopted an aggressive approach to this issue.

It’s a big deal, and it’s becoming a bigger challenge for employers that use different forms of contingent workers to assist in their operations.

Determining whether a company is a joint employer of an individual with another company is fact-intensive and is decided on a case-by-case basis. The analysis turns on the level of control exercised by each entity over the individual, and a consideration of such things as who supervises day-to-day activities, who controls assignments and hours of work, who hires and fires, and who provides benefits and administrative services, such as payroll and withholding.

By way of example, the Department of Labor’s Wage and Hour Division now appears to be focusing on industries like hospitality, health care, energy, janitorial services and construction – among others – when it comes to finding joint employer relationships.

If found to be a joint employer, the price tag can be substantial. In addition to making an employer jointly and severally liable for any employment law violations, penalties or judgments, a company found to be a joint employer of an individual it believed was the employee of another entity may bear other responsibilities such as tax withholdings, participation in benefit plans, workers’ compensation coverage, unemployment benefits, payment of overtime, and the like.

With such potentially high stakes, employers should review their current use of contingent or contract workers and make sure those individuals are sufficiently independent and controlled by their primary employer to decrease the chance of a finding that they are your joint employee.

This article appeared in the November 2, 2016, issue of The Journal Record. It is reproduced with permission from the publisher. © The Journal Record Publishing Co.