Joint Employment Requires FLSA Compliance by Both Companies

When an individual is employed by two or more entities at the same time, the entities may be “joint employers,” meaning both entities are responsible for FLSA compliance. Recently, the DOL updated the balancing test used to determine whether a joint employment relationship exists and whether the businesses share FLSA liability. The DOL now considers the following four factors:

  1. whether the employer has the power to hire or fire the employee; 
  2. whether the employer supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  3. whether the employer determines the employee’s rate and method of payment; and
  4. whether the employer maintains the employee’s employment records.

These factors are weighted based on the circumstances of each case, meaning not all need be satisfied. The DOL also clarified that a few factors that were previously part of the analysis should no longer be considered (e.g., having a franchisor business model). 

Business Takeaway: Businesses who share employees (or have employees who straddle/perform work for various entities) should take care to understand joint employment. If you have questions about joint employer relationships, contact Corey at 414-446-8800 or corey@goldsteinsc.com.

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