Despite the spread of marijuana legalization initiatives, the term “joint employment” has nothing to do with edibles, 4/20 day, or the prevailing aroma at a Jimmy Buffett concert. Joint employment simply means that more than one entity is a worker’s employer — at least under some applicable law.
In joint employment there is usually a primary employer and a secondary employer. The primary employer, for example, could be a staffing agency. The staffing agency pays the worker, onboards the worker with tax and immigration forms, and assigns the worker to a worksite. The secondary employer is the company where the staffing agency worker performs the services. It’s the company that most directly benefits from the work being performed.
Even though the secondary employer expects the primary employer (the staffing agency) to pay a minimum wage, to properly calculate and pay overtime, and to provide other benefits to its primary employees, a secondary employer can be held liable if the primary employer drops the ball. If the ball dropping is a violation of the law — for example, the primary employer didn’t properly pay overtime — then both joint employers can be held liable.
Joint employment is a backup plan for what happens when the primary employer doesn’t do what it’s supposed to do. If Staffing Agency A goes bankrupt and doesn’t pay wages, or if it miscalculates overtime, or if it doesn’t pay for off-the-clock work, both Staffing Agency A and Company B can be deemed joint employers. As joint employers, either company can be held fully liable when a worker doesn’t get what the law says he or she should get.
Let’s digest that for a moment: That means a joint employer can be held responsible for wage and hour violations even when it has no control over how the primary employer runs payroll or calculates worker pay.
In other words, being a joint employer can mean getting punished for things you didn’t do — and weren’t expected to do. As we explained here, it’s like taking steroids by accident.
That hardly seems fair. But it’s the law, intended to protect workers and to ensure there are deep pockets somewhere to ensure the worker is properly compensated for work performed.
So do you want to avoid joint employment? Not necessarily. Joint employment by itself is not against the law. It is not illegal to be a joint employer. Joint employment becomes a problem only when the primary employer didn’t treat its employees as the law requires. The law doesn’t care who was supposed to do it. In a joint employment situation, both companies are responsible.
That’s why a detailed contract is so important when engaging a staffing firm to supply employee labor. Contracts with staffing agencies should clearly spell out which company is responsible for what. You can read more here about common deficiencies in off-the-shelf staffing agency contracts. Those agreements generally need to be beefed up to provide proper protection.
How do you know if you are a joint employer? That’s (unfortunately) a tougher question to answer. The test for Who Is a Joint Employer? varies state-by-state, law-by-law. Here is a map showing the current chaos and inconsistencies in the tests. Several previous blog posts address the various tests being used and how these tests continue to develop. We’ll continue to post frequently on developments in joint employment, which is one of the focal points of this blog.
For now, my best non-legal advice is: Subscribe to this blog!
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© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.