Is Joint Employment Illegal?

Is joint employment illegal? Buddha statue(Or, How is Joint Employment Like Tibetan Reincarnation?)

In Tibet, it is illegal to be reincarnated as a living Buddha unless “a majority of local religious believers and the monastery management organization” has requested the reincarnation. This is according to State Religious Affairs Bureau Order No. 5, issued in 2007, apparently to clamp down on rampant, uncontrolled reincarnations.

Joint employment is like Tibetan reincarnation in that both have lots of rules. But unlike Tibetan reincarnation, joint employment is not illegal.

Joint employment merely means that, in the eyes of the law, there are two employers. So far, no problem.

The problems arise if the primary employer doesn’t do what it’s supposed to do.

Consider a staffing agency scenario. The staffing agency is the primary employer. If the staffing agency’s employees are working at your company, taking direction from your supervisors, and working side-by-side with your employees, then the staffing agency workers are probably your joint employees.

The staffing agency is expected to pay its employees minimum wage, properly calculate their overtime, track their hours, etc. If they do all those things, no problem.

But if they don’t, that’s when joint employment becomes a problem. Even though your company has no control over the payroll processes of the staffing agency, your company can be held liable for their mistakes. That’s because under the Fair Labor Standards Act (FLSA), joint employers are both responsible for making sure that employees are properly paid.

The lesson here is to be careful about the companies you partner with for your staffing needs. If the agency is reliable, well-established, well-financed, and well-insured, then you should be in good shape. Fly-by-night operations that price their services at too-good-to-be-true discounts are a risk — not just because they might fail to provide you with quality employees, but because they might fail to properly pay those employees and then your company can be held responsible.

Be careful who you invite into your tent. Screen your staffing agencies. Impose contractual requirements that protect your business. Require adequate insurance. And do not ever permit any unauthorized reincarnations.

 

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Irma, Harvey and Force Majeure Clauses: What Does It All Mean?

What is Force majeure hurricane legal law irma harvey contracts IMG_1108Your contracts with staffing agencies and consultants probably include a bunch of legalese boilerplate mumbo jumbo at the end, which no one ever reads. One of those standard clauses is a “force majeure” clause. That’s French for “Skim over this clause.”

Companies affected by Irma and Harvey, however, may have good reason to check their contracts for these clauses. “Force majeure” means, literally, superior force.

These clauses typically say that So-and-so is excused from performing under the contract in the event of uncontrollable circumstances, such as war, terrorism, hurricanes, voodoo curses, other Acts of God, or anything caused by Pedro Cerrano and Joboo’s Cult (Major League) [Ed. Note: “Hats for Bats!”].

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Tip for Master Services Agreements: Protect Your Business Opportunities

Master servbice agreement protect business opportunities non-circumvention clause staffing agency agreement IMG_1095If you google “Quotes about Opportunity,” you’ll find 1273 quotes on Goodreads.com. Everyone’s interested in opportunities. But when it comes to business relationships, don’t let others take yours.

When servicing a customer, businesses often call upon use subcontractors for help. That can be a win-win, so long as the subcontractor does not try to poach the relationship once that deal is done.

Consider protecting the opportunities you present to subcontractors with a non-circumvention clause. The concept here is that when your business has introduced a subcontractor to a customer to work on a project, the subcontractor should not be Continue reading

Avoid These FMLA Traps with Joint Employment

nurse - FMLA leave and joint employment-359321_1920The Family and Medical Leave Act (FMLA) is already one of the hardest employment laws to comply with. Add joint employment into the mix, and the level of difficulty further increases.

Here are some pointers for handling FMLA issues when joint employment is likely to exist:

Issue 1: Is there Joint Employment?

To determine whether two companies are joint employers under the FMLA, the Economic Realities Test is used. This is the same test used under the Fair Labor Standards Act (FLSA). (See this post for a recent development that threatens to expand the definition of joint employment under the FLSA.)

The DOL has advised that in most staffing agency relationships, there is joint employment.

Issue 2: How Does Joint Employment Affect An Employee’s FMLA Eligibility?

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When an Employee Double-Dips On a Paycheck, Who Pays?

Remember this?

Suppose the chip is a check, and the employee tries to cash it twice? Who would you rather be, Costanza or Timmy?

Staffing agency clients are increasingly pointing to a fraud committed by disloyal short-term employees. They cash a paycheck on their mobile app, then deposit the paper check a second time for duplicate payment. The check clears twice. Who must pay?

While this problem can arise in many scenarios, including with regular W-2 employees, it seems to be occurring more frequently with staffing agency employees, PEOs, temps, and other short-term workers. So let’s take a look.

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Joint Employment Is Like Taking Steroids By Accident

athlete-joint employment - staffing agency - 1840437_1920It seems like every month another professional athlete is caught using a prohibited substance. The typical script (after getting caught) is to blame the maker of a supplement. “I should have more carefully checked the label,” or “I had no way of knowing what was in that synthetic elephant urine.”

Fair or unfair, every athlete knows that he/she is responsible for what goes into the athlete’s body, whether the juicing was intentional or not.

The same rule applies to companies who use staffing agencies.

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Avoid this Common But Disastrous Mistake in Staffing Agency Agreements

staffing services mistake-1966448_1920

A client once asked me to review the Employment Agreement of a candidate they were considering hiring. The candidate had recently been terminated but his Employment Agreement contained a 12-month non-compete, and my client’s job offer seemed pretty clearly to be for a competing job.

But the terminating employer made once huge mistake. When it meant to terminate employment, instead it terminated the agreement … and with it, the non-compete.  Oops!

I see the same mistake in Staffing Agreements and Professional Services Agreements all the time.

These agreement are usually intended to serve as Master Service Agreements (MSA), with additional work orders to govern the actual services to be provided. These MSAs contain very important clauses that are intended to survive, even after the services have stopped. Examples of clauses intended to survive the termination of services include indemnification, insurance coverage, preservation of confidential information, and right to audit.

The mistake I see over and over, however, is the inclusion of a termination clause that allows for termination of the agreement, not merely termination of services.

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