How do I know if my Business is considered a Joint Employer?

How do I know if my Business is considered a Joint EmployerIf your business is classified as being a joint employer, you could be liable for workers compensation claims for temporary employees. As the traditional workplace model continues to shift more and more towards the use of staffing models for the hiring process, joint employers must also be careful to ensure they comply with minimum wage and overtime requirements.

So, what does it mean to be a joint employer? According to the U.S. Wage and Hour Division (WHD), “joint employment exists when an employee is employed by two (or more) employees such that the employers are responsible, both individually and jointly, to the employee for compliance with a statute.” The Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) share the same broad definition of “employment.”

There are two types of joint employment: horizontal and vertical. Joint employment is commonly seen in the construction, agricultural, janitorial, distribution and logistics, and hospitality industries.

According to the U.S. Department of Labor (DOL), horizontal joint employment exists when the employee has employment relationships with two or more employers and those employers are associated or related with respect to the employee, such that they jointly employ the worker. An example of horizontal joint employment is a worker who is employed by two different restaurants that share business operations.

In vertical joint employment, a business utilizes a third party to hire workers, such as a leasing agency or a staffing agency. An example of vertical joint employment is a worker who is placed by a staffing company to do housekeeping work at a hotel.

To reduce the risk of your business being considered a joint employer, ensure that the temporary agency retains as much control as possible over the terms and conditions of the worker’s employment, such as setting pay and benefits, work assignments, discipline, performance counseling, etc.

Additionally, your business should avoid using temps for an extended period of time. Also, be sure to create a contract that specifies the worker’s role and status as a temporary employee.

For more information on joint employment, contact McGrath Insurance Group at 508-347-6850 or marketing@mcgrathinsurance.com.

*This article is written for informational purposes only and should not be construed as providing legal advice.