Federal agencies examining definition of joint employer

The definition of “joint employer” has been a source of confusion for some time. Joint employment, also known as co-employment, is the sharing of control and supervision of an employee’s activity among two or more business entities. While a single definition is not on the horizon, there are efforts underway by three key agencies to refine their uses of the term.

At present, various government agencies provide differing definitions of joint employment, defining situations in which joint employment may occur with respect to that law. On November 20, 2019, the federal government released its Unified Agenda of Federal Regulatory and Deregulatory Actions – Fall 2019which reports on the actions administrative agencies plan to issue in the near and long term.

• The EEOC will explain in a proposed rule, expected in December, when an entity qualifies as a joint employer under federal equal employment opportunity laws such as Title VII, the Equal Pay Act, the Age Discrimination in Employment Act and Americans with Disabilities Act. This is the first time the EEOC will address joint employment. The agency plans to clarify its interpretation based on the definitions of the statutory terms “employee” and/or “employer.” It is expected that the proposal will be out for review at least until April 2020.
• The DOL may issue a final rule in December on who is a joint employer under the Fair Labor Standards Act. The last revision of this definition as it applies to FSLA was in 1958.
• The National Labor Relations Board also plans to finalize in December its rule on who is a joint employer under the National Labor Relations Act. NLRB has been working to finalize its proposed rule since September 2018. The proposed NLRB regulation is designed to limit joint employer liability, and under the rule, an employer would be considered a “joint employer” only if that employer possesses and actually exercises “substantial direct and immediate control” over the employees’ essential terms and conditions of employment in a manner that is not “limited and routine.”

Implications for Workforce Management

When sourcing workers through a staffing agency or using a third-party to manage internally sourced temporary workers, companies may be considered a “joint employer”. In these cases, both companies could be held liable for such legal issues as proper pay and benefits, harassment and discrimination prevention, and provision of employee leave.

Steps can be taken to mitigate risks stemming from joint employment claims. Contractual agreements with suppliers and workers should clearly specify that the agency is the employer of record. Worker oversight activities such as screening, background checks, drug tests, performance assessments, payroll administration, training, termination and offboarding should be performed by the supplier. Hiring managers within your company should be trained on proper communication and supervision of contract workers. Ensure that your suppliers are adhering to all federal and state worker regulations and included indemnification clauses within each supplier agreement. Contact marketing@nextsource.com to learn more about this changing legislation.