Tag Archives: Joint Employment

10.13.25
by

DOL Reminds Employers that Joint Employment Comes in Two Flavors – Vertical and Horizontal

Foie gras ice cream anyone?

We all know that ice cream comes in many flavors. But some are particularly unusual. For example, a French company sells ice cream with flavors like foie gras, caviar, mustard, and truffle. Presumably, those come in separate scoops.

A U.S. company sells deviled egg custard with smoked back team ice cream. That’s a firm no for me. A New York gelateria offers wasabi. Again, pass.

Less fun fact: Joint employment also comes in two flavors — vertical and horizontal.

Vertical joint employment is when the employee of one company performs services for the benefit of a second company, like in a staffing agency scenario. That’s probably what you think of when you consider joint employment.

But there’s also horizontal joint employment, and that flavor was the subject of a recent DOL opinion letter (FLSA 2025-05). The letter reminds us that even under the current administration, the concept of joint employment is alive and well.

Horizontal joint employment occurs when an employee works for two separate companies in the same week, but those companies share ownership, management, scheduling responsibility, or other significant areas of coordination.

Under the facts addressed in the opinion letter, a hostess worked at both a restaurant and a members-only club. She worked fewer than 40 hours per week at each, but worked more than 40 hours per week combined.

The restaurant and the club were on the same property, shared a kitchen, shared some managers, coordinated schedules, and were “operationally integrated with each other,” as the DOL put it. The employee also sometimes performed work for the club while clocked in at the restaurant.

While the locations were run by separately incorporated entities and had separate upper management teams, the overlap in operations was enough for the Acting Wage and Hour Administrator to conclude that the employee was jointly employed. That means her hours had to be combined for purposes of determining her eligibility for overtime. If she worked more than 40 hours combined for the two entities, she would be due an overtime premium. The two joint employers would have to determine how to allocate the premiums between them, and if they failed to do so, both would be jointly liable.

This opinion letter is a good reminder not to overlook the potential for horizontal joint employment. It’s a lesser known flavor of joint employment, but just as loaded with cream and sugar.

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

© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 
09.29.25
by

Clearing the Fog? New Joint Employer Test Is Being Considered for Franchisors

I took last week off work to visit Asheville. The first morning, we woke up at 5 am for a sunrise hike at Craggy Pinnacle, along the Blue Ridge Parkway. This was our view at the top.

Fortunately, the fog burned off after an hour or so. We waited and were rewarded with some spectacular views. Our 7-month old puppy Louie was just happy there were other dogs at the top to play with. Here he is, admiring the view.

The lesson, of course, is to be patient and sometime the fog will clear. (Or check the weather report?)

Franchisors are hoping for the same reward, through the proposed American Franchise Act, introduced in the House in September and now before the House Committee on Education and Workforce.

The bill, which has at least some bipartisan support, would change the definition of joint employment under the NLRA and FLSA for franchisee-franchisor relationships.

The bill would establish that a franchisor can be a joint employer only if it exercises “substantial direct and immediate control” over one or more “essential terms and conditions of employment of the employees of the franchisee.”

“Essential terms and conditions of employment” means wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

To be a joint employer, the franchisor would have to control these terms with respect to individual employees. Setting baseline standards and brand guidelines would not create joint employment.

The risk of joint employment liability is an ongoing concern for franchisors. The franchise business model requires a level of control to ensure brand consistency and a uniform customer experience across locations. The American Franchise Act, if passed, would help to protect the franchise model and establish clear guidelines for what level of control is needed to create a joint employment relationship.

We’ll see if Congress decides to lift the fog.

Here’s a better view from the hike:

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

© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 
08.18.25
by

Phantom or Real? Federal Bill Would Create New Joint Employment Test

For three hours each night, a policeman appears out of thin air in a busy park in Seoul, South Korea. His presence has, according to police data, reduced crime in the park by 22%. The policeman, however, has never arrested anyone, and he doesn’t even move around the park.

That’s because he’s a hologram.

The police chief attributes the program’s success to “citizens’ perceived safety,” although I’m not sure why anyone would perceive themselves safer in the presence of a hologram. Maybe I should not be so cynical. If it works, it works.

A new federal bill seeks to increase employers’ perceived safety, but without holograms.

The Save Local Business Act, H.R. 4366, would amend the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA) to create a uniform test for joint employer status. By adding a new joint employer test to the statutes, Congress would prevent the NLRB and DOL from trying to change the test every time there’s a new party in the White House.

The Act is a pro-business bill. If it passes, joint employer status would be much harder to establish.

Under the proposed text, joint employer status could exist “only if each employer directly, actually, and immediately, exercises significant control over the essential terms and conditions of employment of the employees of the other employer.”

“Essential terms and conditions” would mean, for example, “hiring such employees, discharging such employees, determining the rate of pay and benefits of such employees, supervising such employees on a day-to-day basis, assigning such employees a work schedule, position, or task, or disciplining such employees.”

The bill is sponsored by James Comer (R-Ky.). It was introduced July 14, 2025. Previous versions of the bill were introduced in 2021 and 2023. Obviously, they failed.

With Republicans controlling the House, passage in the House seems possible, but the likelihood of getting 60 votes in the Senate is pretty remote.

So the bill, while it seems good for businesses, is probably the legislative equivalent of a Korean holographic police officer. It looks nice but exerts no real authority.

You can track the status of the bill here.

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

© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 
01.27.25
by

Hospital Blues? Joint Employer Test Under Review By DC Appeals Court

I ran a search for songs about Washington DC. I didn’t recognize any that popped up, but there is one that caught my eye — and ear.

“Washington DC Hospital Center Blues” is a 1966 release by blues guitarist Skip James. You can check it out here.

Although it may seem like nothing newsworthy is happening in DC lately (tee hee hee, bahahahaha), there is a DC Court of Appeals case worth watching.

The NLRB had ruled that Google is a joint employer of YouTube contract workers, who are represented by the Alphabet Workers Union. The impact of NLRB’s decision would be that Google is forced to the bargaining table to negotiate with workers it does not directly employ. Google defied the order and appealed to the DC Court of Appeals, arguing that it is not a joint employer.

There are a few joint employment issues in the case that are worth watching:

First, what is the proper test for joint employment under the NLRA? Historically, courts have held that a common law right-to-control test applies, but the NLRB keeps issuing its own regulations defining (and changing) the joint employer test.

Second, will courts pay any attention to what the NLRB thinks the test is? If the proper test is a common law test, then the courts don’t need the NLRB to tell it what the common law is.

Finally, whatever the DC Circuit decides, will the NLRB listen? Historically, the NLRB follows the doctrine of non-acquiescence. That’s a fancy of way of saying it doesn’t care what the courts say. If it wasn’t the Supreme Court that ruled, the NLRB tends to ignore the ruling, except as it applies in that particular dispute.

If you’re looking for something interesting that might be happening in DC, this case is a good one to follow.

Oral arguments are scheduled for today.

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

© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 

12.16.24
by

Don’t Get Jailed Because of Your Fat Friend: More Tips on Arbitration Agreements and Joint Employment

A South Korean man was sentenced to one year in prison for binge eating and getting too fat.

It isn’t always illegal to get fat in South Korea, but it is if you do it to dodge mandatory military service, which is what this guy did. His friend, who created the weight-gain plan, was sentenced to six months for aiding and abetting. Yes, really. And his defense was that he didn’t think his friend would go through with it.

One criminal eater, but two men end up in the pokey. Getting in trouble for what someone else does sounds exactly like joint employment.

One issue that often arises in litigation is whether arbitration agreements apply to all defendants in a joint employment dispute. If a plaintiff has an arbitration agreement with his main employer but sues two companies as joint employers, can the second company rely on the first company’s arbitration agreement to get the whole case moved to arbitration?

Sometimes yes, but courts are split. It’s going to depend on the relationship between the parties and how the arbitration agreement is drafted. Let’s quickly address each of those points.

1) Courts are split.

In a recent California case, a grocery store employee sued his employer and a related entity for wage and hour claims. He argued that both were joint employers. He had an arbitration agreement only with the primary employer.

The California Court of Appeal (2d district) ruled that the arbitration agreement required the claims against both parties to go to arbitration. The plaintiff was not allowed to allege that the parties were so interrelated as to be joint employers, but too distinct for both to be covered by the arbitration agreement. The outcome may have been swayed by the close corporate relationship between the defendants. The outcome could be different if the alleged joint employers were unrelated, such as in a staffing agency relationship.

A few years earlier, however, the California Court of Appeal (1st district) reached the opposite conclusion, finding that a non-signatory to an arbitration agreement could not enforce it.

2) It depends on how the agreement is drafted.

The best way to avoid this problem is to draft arbitration agreements to take the joint employment risk into account. Be thoughtful when defining the scope of covered claims and covered entities.

The agreement should apply to claims against the primary employer and related entities, as well as managers, supervisors, etc. Also consider adding third-party beneficiaries.

If employees will be providing services to another entity, such as in a staffing agency relationship, make sure those services are covered.

If your company is receiving the services and another company is the primary employer, check to see whether there’s an arbitration agreement in place, and review its scope.

If I am representing the company receiving the services, I like to require that as a condition of being allowed access to the property (or receiving confidential information, or whatever else), each individual must sign an arbitration agreement that covers claims against the company receiving the services. These can be short, one-page arbitration agreements. If drafted correctly, they do not suggest that there is any employment relationship.

Takeaways

  • Individual arbitration agreements with class waivers are a great way to avoid class action exposure and keep disputes out of public courts — but only if their scope is broad enough to cover the claims and parties.
  • If you are the company receiving services, ask the primary employer whether there are individual arbitration agreements in place and ask to see them.
  • Require anyone providing services, even if not your employee, to sign a contract agreeing to arbitrate claims, and make it a condition of being allowed to work on the property.
  • And most important of all, never help a skinny Korean get fat to avoid military service.

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

© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 
11.25.24
by

A Car Crash? Trump’s Labor Secretary Pick Supports ABC Test for Worker Classification

Sometimes things don’t make sense when you read them. Like this: Here’s an adorable video of a dog getting hit by a car.

You need to dig deeper to make sense of it. If you watch the video, you’ll understand. The sentence is true, and the video is adorable.

Another thing that didn’t make sense to me when I first read it is that Trump’s pick for Secretary of Labor, Lori Chavez-DeRemer, was a co-sponsor of the PRO Act.

I had to dig deeper. Is that really true? It is.

Remember the PRO Act? It’s an acronym for Protecting the Right to Organize. It’s a Democrat-sponsored bill that threatens to blow up the gig economy and convert most independent contractors to employees.

The PRO Act would change the definition of “employee” under the NLRA so that all workers are presumed to be employees, not independent contractors, unless the strictest version of the ABC Test is met. That’s the same test as in California, but without all the exceptions.

In the 2023 version of the PRO Act, a worker is an employee under the NLRA unless (all 3):

(A) the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;

(B) the service is performed outside the usual course of the business of the employer; and

(C) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

Yes, that’s the same dreaded Part B that makes California such a difficult place to maintain independent contractor relationships.

The PRO Act would also broaden the definition of joint employment under the NLRA.

Chavez-DeRemer was one of three Republicans to co-sponsor the bill.

The PRO Act will not get the 60 votes needed in the Senate, so it’s not going to pass anytime soon (so long as the filibuster rule remains intact). But this bill is so pro-union that her support should be of concern to any business that engage contractors.

Chavez DeRomer served only one term in Congress, so she did not build an extensive record. But her support of the PRO Act is a part of that limited record.

I expect we’ll learn more about her views during the confirmation process. Her support of the PRO Act is something to keep an eye on. Getting hit with the PRO Act (or some DOL-authorized version of it) would be far worse that the damage done by the car hitting the dog in the video, which you really should watch if you skipped over the link above.

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

© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 
11.11.24
by

For Upcoming Changes to Independent Contractor Rules, Look to Band Names

The band America (“A Horse with No Name,” “Ventura Highway”) was formed in England. Yes, really. But by three Americans whose fathers were in the U.S. Air Force and stationed overseas.

That got me thinking about other bands with place names. When I was growing up in Miami in the 1980s, if someone mentioned Boston, I thought of just another band out of Boston, on the road to make ends meet. If someone mentioned Kansas, I thought of dust in the wind, even though I never particularly liked that song. Chicago made me think of the Cubs, but only in 1984. Otherwise, does anybody really know what time it is?

Not that I am older and have a life, place names mean something different to me. They now make me think of federal, state, and local laws affecting independent contractor status.

(Ok, I take back the comment about having a life. I realize this is a sad and pathetic way to think of place names.)

After the election, place names are going to take on greater importance as businesses aim to protect their independent contractor relationships. Federal enforcement activity isn’t going away, but I expect to see a growing emphasis on legislation and enforcement at the state and local level.

In the realm of non-employee workers (independent contractors, staffing agency temps), I expect to more state and local legislation in these areas:

1) Freelancer Laws. We now have freelancer laws in CA, NY, IL, Los Angeles, NYC, Minneapolis, Seattle, and Columbus. These laws impose requirements when retaining individuals who are independent contractors. The laws generally require written contracts that contain several mandatory components.

2) Temporary Worker Laws. We have these in NJ and IL. They generally require that staffing agencies pay their workers an equivalent wage rate (and sometimes the value of benefits) being paid to workers they work alongside at the company where they are providing services.

3) Misclassification Laws – the Bad Kind. In states with Democrat trifectas (house, senate, governor), expect new laws that make it harder to be an independent contractor. Expect more ABC Tests, like in CA and MA. Other states have ABC Tests for determining who is an employee under workers’ comp and unemployment law.

4) Misclassification Laws – the Good Kind. In states with Republican trifectas, expect more safe harbor laws. If you satisfy a set of basic requirements in your dealings with a non-employee worker, then the worker is an independent contractor under that state’s laws. Pesky balancing tests (and long-haired freaky people) need not apply. We have these state laws in WV and LA (not L.A.)

We will likely see changes at the federal level too, but these may take years to develop. The federal agency rulemaking process is slow and cumbersome, and agency rules will take on less importance as federal agency power continues to diminish after the Supreme Court’s Loper Bright decision.

I haven’t touched on Europe or Asia, but those are bands for another day and another post. When? At some point, in the heat of the moment, but only time will tell.

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

© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 
08.05.24
by

Filled Up With Rules? Temp Worker Laws Are Still Being Challenged

Teacher, don’t you fill me up with your rules (fn1)

Brownsville Station was a rock band formed in Ann Arbor in 1969. (Go Blue!) Their biggest hit, Smokin’ in the Boys Room, reached #3 on the Billboard charts and was later covered by Motley Crue. The song was Motley Crue’s first Top 40 hit. Apparently LeeAnn Rimes covered the song too in an album called Nashville Outlaws: A Tribute to Motley Crue, which is I guess was her tribute to a tribute to Brownsville Station.

Business groups in New Jersey and Illinois have also been pleading don’t you fill me up with your rules – in particular, rules related to the use of temp workers.

As discussed here and here, these two states passed temporarily worker laws that required temps to be paid wages and benefits equivalent to the regular workers they are supplementing.

Those rules are both in effect, but there are still several moving parts you should know about.

In Illinois, a judge struck down the portion of the law that required payment of equivalent benefits, ruling that this portion of the law was preempted by ERISA. Illinois lawmakers are now considering options to amend the law to require the payment of the value of benefits, if not the benefits themselves.

In New Jersey, the law took effect, but there’s an active lawsuit in which staffing and other business groups have challenged the law. The case is pending. New Jersey Staffing Alliance et al. v. Fais et al., No. 1:23-cv-02494, D. N.J.

For now, these two temporary work laws remain in effect, except for the benefits aspect of the Illinois law. But the situation remains fluid. It also would not be surprising if other states enacted similar laws. Companies using temp labor should continue to monitor these developments.

fn1 – Everybody knows that smokin’ ain’t allowed in school.

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

© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 
07.29.24
by

NLRB Goes Shopping in Joint Employer Fight, Post-Zippy Edition :(

There was no post last week because I was on vacation. We went to Lake Michigan for a week of lakeside R&R, which was terrific and relaxing. I mostly unplugged, read books having nothing to do with lawyering, and went on two long beach runs (memo to the autocorrect gods: not Long Beach (CA) runs).

The only sad part was that blog mascot and loyal friend Zippy passed away after 16 years of labradoodling. She had been fighting dementia and cancer, which is not a winning combination. The only positive was that the whole family was together, and the kids got to see her one last time.

You may remember Zippy from such blog lists as Face It: The New DOL Independent Contractor Rule Faces Court Challenges; and How to Support Prong C of the ABC Test, and Why You Can’t Lie Down When Faced with an Audit; and Get Aligned on Commissions: Ten Tips for Using Independent Contractor Sales Reps.

Now that I’ve got that out of the way, and now that we’re back home, the refrigerator is empty and so it’s time to go shopping.

The NLRB is going shopping too, despite what you may have read elsewhere.

On July 19, the NLRB submitted a motion to voluntarily dismiss its appeal in the Fifth Circuit. The NLRB had filed this appeal after a district court judge in Texas invalidated the NLRB’s 2023 joint employer rule. The effect of that ruling was to reinstate the 2020 rule, which makes it difficult to find joint employment under the NLRA.

So the 2023 rule is dead, right? That’s what I’ve been reading. The NLRB must be hanging its head and admitting defeat, right?

I’m not so sure that’s what the NLRB is doing. You see, there is another set of appellate challenges to the 2023 joint employer rule pending in the District of Columbia Court of Appeals. The D.C Court of Appeals is viewed as a more favorable venue for the NLRB to litigate than the more conservative Fifth Circuit.

In June, the D.C. Circuit ruled that it would hold its case in abeyance until the Fifth Circuit ruled, handing a win to business groups fighting the rule, since employers would rather have this issue decided in the Fifth Circuit.

By withdrawing its Fifth Circuit appeal, the NLRB ensures that the dispute will shift back to the D.C. Circuit. Presumably, the D.C. Circuit will reopen its case and consider whether the new joint employer rule can survive.

So when the NLRB withdrew its appeal in the Fifth Circuit, I don’t think that means the Board is giving up the fight. I think they might just be going shopping for a more favorable venue.

I could be wrong. In its Motion for Voluntary Dismissal, the NLRB writes that it “would like the opportunity to further consider the issues identified in the district court’s opinion” and that it seeks dismissal “to allow it to consider options for addressing the outstanding joint employer matters before it.”

I think that means judge shopping, not quitting. We’ll see what happens in the D.C. Circuit.

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

© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 
06.10.24
by

Battle of the Acronyms: Fifth Circuit to Rule First on NLRB Joint Employer Case

Battle knights

The government loves acronyms. Sometimes a little too much. If you check the DHS.gov website for its guide to acronyms, you’d see that AA can refer to eight different things, all entirely unrelated. AA can mean Affirmative Action, Approval Authority, or my favorite, Atomic Absorption. (A close second is Anti-Aircraft Improvised Explosive Device Incident. Sadly, no explanation is provided for why DHS drops the IEDI part.)

AAA has four approved meanings, including American Ambulance Association and Area Agency on Aging.

In law we get lots of acronyms too, and sometimes they show up in case names. Today we’re looking at the case of SEIU v. NLRB, which is battle over JE (joint employment, heh heh).

SEIU v. NLRB is one of two cases involving a challenge to the NLRB’s recent joint employer rule.

The NLRB joint employer rule is being challenged in both the D.C. Court of Appeals and the Fifth Circuit. The Fifth Circuit is generally viewed as more pro-business, with the D.C. Court a bit more deferential to the NLRB. So to U.S. businesses intent on squashing the new joint employer rule, location matters.

Last week, the D.C. Circuit issued an order that it will stay its case, and the Fifth Circuit gets to decide first. 

How did we get here?

In October 2023, the NLRB issued its new joint employer rule, which would vastly expand the scope of joint employment.

In November 2023, the SEIU, seeking a friendly ruling, filed a petition in the D.C. Court of Appeals, asking the court to review and uphold the rule. For those of you wondering how the SEIU could file directly with the Court of Appeals, there’s a rule allowing it.

Meanwhile, at about the same time, the U.S. Chamber of Commerce (and others) filed a lawsuit in the Eastern District of Texas, asking the court to stop the rule. In March 2024, the federal court in Texas enjoined the rule. The NLRB then appealed to the Fifth Circuit.

Then we had a potential stalemate, with two federal Courts of Appeal being asked to review the same rule.

Now that the D.C. Court of Appeals has agreed to hold its case in abeyance, the Fifth Circuit will go first, which is likely a good thing for the business community.

The Fifth Circuit case is just getting started. the NLRB’s appellate brief is due June 26, 2024. Until the Fifth Circuit rules, the joint employer rule remains stayed. The joint employer rule did not take effect. So now we wait to see what the Fifth Circuit will do, and we should not expect a ruling until 2025.

EOP.

(End of post.)

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

© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

2018_Web100Badge
 

[Image credit]