Monday, January 25, 2016

The federal assault on joint employment continues

First it was the NLRB. Next it was OSHA. Now, the Department of Labor’s Wage and Hour Division is taking its turn cracking down on joint employment.

Last week, the WHD launched a microsite entitled, Joint Employment under the FLSA. Most notably, this site included the publication a new Administrator’s Interpretation, which picks up the NLRB’s liberalized joint employer standard by relying on indirect or potential control, in addition to actual control, as the lynchpin of joint employment.

Also of note, this Administrator’s Interpretation discusses two different types of joint employment: vertical joint employment and horizontal joint employment. The WHD is even so kind as to explain these two breeds of joint employment in handy charts and graphics.

An example of vertical joint employment would be a worker placed by a staffing company to do housekeeping work at a hotel. An example of horizontal joint employment would be an employee jointly employed by two restaurants that are organized as two different companies but share operations. According to the WHD, provided that the indicia of joint employment are met in both cases, all employers in the chain would be individually, and jointly, responsible as joint employers for any FLSA violations committed by the other(s) in the chain.

Joint employment is clearly an enforcement priority for the WHD. Employers would be wise to pay attention to this issue, as it has the potential to impact unwary employers in significant ways. Also, if you think you are in a potential joint-employment situation, you should be talking to your employment counsel to discuss how to best protect yourself, such as via indemnification clauses in contracts to assign risk and responsibility for wage-and-hour (and other) violations.