Joint employment: Is your company at risk?
Temporary agency workers, leased workers, and independent contractors provide organizations with flexibility, but they can also create unknown risks for employers. Companies using contract and other types of temporary workers may not consider these personnel to be employees, but the law might disagree. Organizations hiring agency workers, leased workers, or independent contractors could be considered “joint employers” under various employment laws. For example, the Family and Medical Leave Act (FMLA) says joint employment exists when an employee “performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the week.”
The ambiguity of the definition of joint employment leaves many employers at risk of not knowing whether they are considered a joint employer and subjects many organizations to the liability of several employment laws. For example, under FMLA, a company that employs 30 employees and leases 20 more through a temp agency may be surprised to learn that all 50 are entitled to time off. Additionally, the Fair Labor Standards Act’s joint employment principles can determine that an employee working 30 hours a week for two different employers is in fact working 60 hours a week for one employer and thus entitled to overtime pay. To help protect their organizations from potential liabilities due to joint employment, here are three steps employers can take:
- Make it clear that you are not a joint employer: Include language in contracts with any staffing agencies, franchisees, or contractors that your company is not the employer of the temporary workers and does not have control over the terms and conditions of the employment of these workers.
- Avoid actual and perceived control over temporary workers: Your company should have procedures in place to avoid all control over these workers’ payroll, benefits, hiring, firing, training, reviews, or employment records.
- Do your research: Before entering into an agreement with a staffing agencies or other outsourcing companies, research whether your organization can count on that company to enforce federal and state employment laws.
These tips are meant to serve as an overview of potential issues; however, as with most employment law issues, employers and organizations should seek legal advice tailored to their individual company and circumstance. Attorneys at Mountain States Employers Council are available to help organizations assess such scenarios and and identify any potential legal risk.