Joint Employment between Companies under FLSA

If you own more than one business or have a business relationship with another company in which you “share” the same employees, it can be a convenient arrangement. The employees can get extra work (and extra pay) without the hassle of trying to juggle the schedules of having two jobs because the employers coordinate with each other. It can also be handy for the employers for the same reasons.

However, it is important for employers to be aware of the provisions in the law when it comes to calculating overtime in situations like this.

A single individual may be considered the employee of two or more employers at the same time under the Fair Labor Standards Act (FLSA) of 1938. There is nothing in FLSA that prevents an individual employed by one employer from also entering into an employment relationship with a different employer. However, in some instances (like the one described above), such an arrangement may be considered “joint employment.” If that is the case, the employers not only share the employee(s), they must also share responsibility for tracking the employee’s total hours worked, particularly for determining whether overtime is due.

Joint Employment Overtime Pay under the Fair Labor Standards Act

Whether the employment relationship is considered “joint employment” under FLSA depends upon all the facts in the particular case. It is not required that common ownership exists in order to be considered joint employment for purposes of the Act. If the facts establish that the employee is employed jointly by two or more employers, i.e., that employment by one employer is not completely disassociated from employment by the other employer(s), all of the employee's work for all of the joint employers during the workweek is considered as one employment for purposes of the Act. Therefore, all joint employers are responsible; both individually and jointly, for compliance with all of the applicable provisions of the Act including overtime.

For example, in a single workweek, if an employee works 25 hours for Employer A and 20 hours for Employer B, the employee (having worked a total of 45 hours) will be due 5 hours of overtime. The employers are free to agree between them how the extra payment will be made. The same is also true if one individual owns both businesses.

Where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally is considered to exist in situations such as when:

1. There is an arrangement between the employers to share the employee's services, for example, to exchange workers.
   
   
2. One employer is acting directly or indirectly in the interest of the other employer in relation to the employee.
   
   
3. The employers are not completely separated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.

On the other hand, if the facts establish that two or more employers are acting entirely independently of each other and are completely separate with respect to the employment of a particular employee, who during the same workweek performs work for more than one employer, neither employer is required to consider work performed by that employee for the other employer.

We understand that employment law can be complicated and confusing. FrankCrum is here to help business owners navigate these complex issues. Contact us to learn how we can take this and other burdens off your shoulders so you can focus on the success of your business.