WHD Provides Guidance on Joint Employment
On January 20th, the Wage and Hour Division (WHD) of the US Department of Labor issued the Administrator’s Interpretation concerning joint employment under the Fair Labor Standards Act (FLSA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA). Under these laws, it is possible for a worker to be jointly employed by two or more employers who are both responsible, simultaneously, for compliance. Employers conducting commercial work should keep this guidance in mind to ensure joint employment compliance.
The press release accompanying the Interpretation discussed how companies should take more responsibility for their contracted workforce, pointing out that the country’s workforce continues to change as companies concentrate on core competencies while subcontracting out everything else. It is becoming more and more common for employees to have more than one employer. Additionally, the WHD says they have stepped up enforcement as they continue to see problems across all industries.
The Interpretation identifies common scenarios in which two or more employers jointly employ an employee and are thus jointly liable for compliance. In one particular scenario a laborer is employed by a Drywall Company which is an independent subcontractor on a project. Though the Drywall Company was hired by the General Contractor, the Drywall Company hired the laborer and is responsible for paying them. Yet, the laborer receives the necessary equipment and materials from the General Contractor who also provides workers’ compensation insurance, and is responsible for the health and safety of the laborer.
In this scenario both employers jointly reserve the right to remove the laborer from the project, control the laborer’s schedule, provide assignments on site, and supervise the laborer. This example is indicative of joint employment by a General Contractor.
Generally, once it is determined that a joint employment relationship exists the joint employers are both responsible for compliance with the FLSA and the MSPA. With regard to the FLSA, employers must ensure that the employee receives payment of at least the federal minimum wage for all hours worked and overtime pay at not less than one and one-half times the regular rate of pay for hours worked over 40 in a workweek. Furthermore, joint employers must combine all of the hours worked by the employee in a workweek to determine if the employee worked more than 40 hours and is due overtime pay.
Under MSPA, each of the joint employers must ensure that the employee receives all employment-related rights granted by MSPA, such as accurate and timely disclosure of the terms and conditions of employment, written payroll records, and payment of wages when due.
It may also be worth noting that this Interpretation is similar to the manner in which Davis-Bacon and Service Contract Act contracts are handled; where the prime contractor is responsible for the compliance of the subcontractor. At the very least this should serve as a reminder for companies, regardless of whether they do just commercial, just government, or a combination of both, to review their compliance procedures.
The WHD Joint Employment Interpretation may be found at: http://www.dol.gov/whd/flsa/Joint_Employment_AI.htm