When to Embrace Joint Employment, and When to Run Like Hell (Pink Floyd, 1979)

Joint employment risks dangers choices joint employer IMG_1101Life is full of serious questions. For example, Should I stay or should I go? (The Clash, 1982). Or, Will you love me forever? (practically every song ever, but for now, we’ll go with Meatloaf in Paradise by the Dashboard Lights, 1977).

When engaging non-employee workers, businesses must also confront a serious question: Embrace joint employment, or try to avoid it? (Frank Zappa confronted a different kind of serious question in Why Does It Hurt When I Pee?, 1979, but that’s beyond the scope of this blog.)

Many of my posts have been geared toward strategies for trying to avoid joint employment. There is another way, though. Sometimes, it may be better to embrace joint employment. But know the pros and cons.

Here are some things to consider:

Pros:

So, you’re thinking of embracing joint employment? That’s certainly an option. If you go in this direction, you can exert all the control you want over your non-employee workers. Tell them how to do the work, supervise them, discipline them, make them follow all your rules. Let them have a company email address and fancy name badge. If the workers are going to be joint employees anyway, there’s no reason to hold back.

You still have the benefit of having another company handling the administrative burdens like payroll and onboarding. You avoid adding to employee headcount, and you probably maintain some extra flexibility in setting staffing levels if your business is experiencing ebbs and flows.

Cons:

The biggest downside to joint employment is the risk of joint liability for errors you didn’t make. Did the staffing agency underpay overtime? Or miscalculate hours worked? Or fail to pay for time worked off the clock? Or hire illegal aliens? Or fail to file proper tax forms?

You get the picture. If you are a joint employer, your business is equally responsible for the consequences of any of these errors, even though you had nothing to do with them.

Yes, you can include an indemnity provision in your contract, but that should provide only limited comfort. Is the staffing agency adequately insured? Will they stand behind their promise? Do you want the hassle of defending an audit or lawsuit, then trying to rely on a contract to recover your losses? (Read more on the dangers of joint employment here.)

Joint employment can still be full of nasty little surprises, even when you go into it with your eyes open to the risks.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Enter your email address to follow this blog and receive notifications of new posts by email.

Joint Employment Legislation Needs to Be Expansive — If It’s to Be Effective

IMG_1093On Monday, we wrote about the Save Local Business Act — proposed legislation that, if passed, would create a new definition for joint employment under the NLRA and FLSA. But would that law go far enough?

No. Not at all.

On the bright side for businesses, the law would provide some predictability in that staffing agency workers would most likely be excluded from bargaining units. It would also remedy the current unfairness that results when a staffing agency makes payroll and overtime miscalculations but the company using the workers is held responsible as a joint employer.

But much more needs to be done to provide real clarity and predictability for business owners.

First, the law fails to address who is a joint employer under other federal employment laws, including the Family and Medical Leave Act, Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Occupational Health and Safety Act. Vast uncertainty in these areas would remain.

Second, the law does nothing to address the patchwork of standards under state and local laws. Businesses are subject to those laws too, and it’s fairly common that state and local standards for determining joint employment differ from state-to-state and law-to-law.

Businesses that operate in multiple locations would still be subject to different standards under different laws in different locations. The HR Policy Association has recommended that any legislation intended to clear up the messy patchwork of joint employment standards should include federal preemption or a safe harbor provision — something to ensure that businesses can rely on one set of rules to know whether they are a joint employer or not. That would make much more sense.

The newly proposed legislation has a long way to go. It might never even get to a vote. Let’s hope, however, that the introduction of this bill is just a first step, and that through the amendment process or through a Senate bill, its shortfalls will be addressed.

Business deserve the certainty that would come from a more comprehensive piece of legislation.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Enter your email address to follow this blog and receive notifications of new posts by email.

Congress May Rewrite “Joint Employment” Definition

IMG_1092Congress may finally provide some clarity in determining who is a joint employer. In legislation introduced last week, the House proposed a bill that would rewrite the definition of “joint employer” under federal labor law (National Labor Relations Act) and federal wage and hour law (Fair Labor Standards Act).

The Save Local Business Act — despite lacking a fun-to-say acronym — would create a new standard for determining who is a joint employer under these two laws. The proposed new standard would allow a finding of joint employment “only if such person [business] directly, actually, and immediately, and not in a routine and limited manner, exercises significant control over the essential terms and conditions of employment….”

The definition provides examples of what are “essential terms and conditions,” including:

  • Hiring employees;
  • Discharging employees;
  • Determining individual employee rates of pay and benefits;
  • Day-to-day supervision of employees;
  • Assigning individual work schedules, positions, and tasks; and
  • Administering employee discipline.

No longer would a business be deemed a joint employer for exercising indirect or potential control, as permitted by the NLRB in its 2015 Browning-Ferris decision, which is currently on appeal. (Read more about that here.)

The bill would also overrule a recent decision by the Fourth Circuit Court of Appeals that vastly expanded the scope of joint employment under the FLSA, but only for a handful of Mid-Atlantic states.  Read more on that dreadful decision here.)

As illustrated in this colorful map, the current standard for who is a joint employer varies by which law is being applied and by where you live. The bill, if passed, would provide much-needed clarity in the law — or, at least in some of the laws. The bill would not affect the FMLA, federal anti-discrimination law, or any state or local standards. (In other words, loyal reader, you’ll still need this blog. Ha!)

The bill was introduced by Rep. Bradley Byrne (R-Ala.), but already shares some bipartisan support, with co-sponsors including Virginia Foxx (R-N.C.), Tim Walberg (R-Mich.), Henry Cuellar (D-Texas) and Luis Correa (D-Calif.).

Here’s the current bill.  It’s short, so don’t be afraid to click.

No one knows whether this proposed law will take effect or will even reach a vote (except perhaps Carnac the Magnificent!).  But we can expect significant support from the business community, which may create some momentum toward consiuderation and passage. The National Association of Home Builders has already issued a press release praising the proposed legislation.

If Congress wants to make a positive impact on businesses large and small, this bill could do it. So now let’s all sit back and watch how they screw it up.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Enter your email address to follow this blog and receive notifications of new posts by email.

The DOL Wants You to Know Its Opinions (Here’s Why That’s Good News!)

IMG_1087

Everybody has an opinion, so why not share?

This week, Labor Secretary Alex Acosta announced that the WHD will resume its prior practice of issuing opinion letters to advise on difficult wage and hour issues. This is good news for companies and employees because it increases predictability.

An opinion letter is an official, written opinion by the WHD of how a particular law applies to a specific set of circumstances presented by an employer or employee. The benefit to the general public is that opinion letters are published and may be relied upon.

The practice of issuing opinion letters had persisted for more than 70 years before being discontinued in 2010, when the WHD began issuing occassional general guidance memos instead.

The return of the opinion letter means more predictability and less “Gotcha!

If the proper public role of the DOL is to promote voluntary compliance (as it should be!) and not merely to sack wrongdoers, then this announcement is a big step in the right direction.

This announcement comes shortly after Secretary Acosta’s recent decision to withdraw the WHD’s 2015 and 2016 general guidance memos on independent contractor misclassification and joint employment. Presumably, these would be topics that are now ripe for new opinion letters.

With a new Labor Secretary, employers can expect a shift toward more business-friendly interpretations that respect the existence of independent contractor relationships and decrease the incidence of joint employment findings. As discussed here, the determination of Independent Contractor vs. Employee under the wage and hour laws (e.g., the Fair Labor Standards Act) is made using an Economic Realities Test.

Employers can click here or here to see whether prior opinion letters have been published on any particular wage and hour topic.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Enter your email address to follow this blog and receive notifications of new posts by email.

Labor Dept Withdraws 2015-16 Joint Employment, Independent Contractor Guidance

IMG_1084

Did the new Labor Secretary of Labor finally throw employers a bone? I think so, but it’s too early to tell whether it’s delicious bacon-flavored or some generic processed meat flavor.

On June 7th, the Department of Labor (DOL) announced it was withdrawing the 2015 and 2016 informal guidance on joint employment and independent contractors.

Read the full post here, on BakerHostetler’s Employment Law Spotlight blog.

Why Your Standard Agreements with Staffing Agencies Are Risky Business (Starring Tom Cruise)

broken-glass-joint-employment-agreementIt’s Valentine’s Day. You and your sweetie want to get away for the weekend. Your high school offspring will stay home. They seem responsible, promise not to break the law, and promise if they break anything they will pay for it. So you’re good, right?

Come on, wake up. Have you seen Risky Business? American Pie? House Party (very underrated movie, by the way)? Continue reading

Can You Pay a Contractor Overtime? Should You?

independent-contractor-questionsLet’s talk about good old-fashioned 1099 Independent Contractors — you know, those individuals who are happy to be called contractors until they’re released and then decide they should have been treated as employees.

When retaining a contractor, one of the goals, of course, is to ensure that the contractor is properly classified and is not really (factually) an employee. A secondary goal, however, is to limit liability if the contractor is misclassified.

Today’s question sits at the intersection of these two goals. Continue reading