The U.S. Department of labor issued guidance for employers who share employees. This guidance for “joint employers,” found in Administrator’s Interpretation No. 2016-1 explains that understanding joint employment is important in determining employees’ rights and employers’ obligations under the Fair Labor Standards Act (FLSA).
When two or more employers employ an employee, all of the joint employers are liable for compliance with the FLSA. The employee’s hours worked for all of the employers must be aggregated and considered one, single employment for purposes of determining overtime pay.
The guidance describes different scenarios in which two or more employers are considered to have joint employment over an employee. This can be in “horizontal” joint employment or “vertical” joint employment.
Horizontal joint employment is when the employee works for two or more employers that are related to each other. Vertical joint employment is when the employee works for one employer such as a staffing agency, but is economically dependent on (and therefore employed by) another entity involved in the work.
To make sure that individuals are protected under the FLSA and that employers follow their legal obligations, the DOL will analyze the possibility of a joint employment relationship. Employers should consider the possibility of joint employment when an employee performs services for more than one employer.
A copy of the guidance, which is helpful for understanding if a joint employment relationship exists, can be found here.