Most employees can readily identify their employer. And, most employers can easily identify their own employees (or, they can check their records to figure it out). There are, however, some circumstances where an employee can have two employers and not even know it. Likewise, a business may have an employee and not be aware of it. How does this happen? It is a legal fiction and usually happens when two businesses work so closely over the management of some employees that the law deems both of them as joint employers.
To be a “joint-employer,” an entity must
- exercise control over the employee’s hours, wages or working conditions;
- suffer or permit an employee to work; or
- engage an employee thereby creating a common law employment relationship. So, what does this all mean?
What Does It Mean to “Exercise Control over the Employees’ Hours, Wages or Working Conditions”
At least one court has held that “‘control over wages’ means that a person or entity has the power or authority to negotiate and set an employee’s rate of pay, and not that a person or entity is physically involved in the preparation of an employee’s paycheck.”
Even if an entity does not set or negotiate a workers rate of pay, it nevertheless may be deemed an employer if it exercises control over the employees’ hours or working conditions.” To determine whether this exists, courts look to the following factors:
- did the potential employer hire or fire the employee;
- did the potential employer train and/or supervise the employee;
- did the potential employer determine the employee’s rate and manner of pay;
- did the potential employer set the employee’s hours; and
- did the potential employer tell the employee when and where to report to work and when to take breaks.
No one factor is determinative of the issue. But, the more of these factors are present, the more likely that a business will be deemed an employer.
What Does It Mean to “To Suffer or Permit the Employees to Work”
In order to be deemed an employer under the terms “suffer” or “permit,” the potential employer must have the ability to prevent an employee from working. It is insufficient for the prospective employer to know that the employee is working. For example, if a temporary services agency has the unilateral right to pull a temporary worker from a specific assignment, it may be deemed an employer for wage-hour purposes, even if the employee never provided any services to the temporary service agency.
What Does It Mean “To Engage The Employees”
The courts have concluded that whether an employer “engages the employee,” means the same as whether the employer is a common law employer of the employee. In this regard, the courts look to see if the potential employer has the right to control the details of an employee’s performance. More specifically, the courts look at:
- the extent of control the business exercises over the details of the work;
- whether the worker is engaged in a distinct occupation or business, independent of the business;
- whether the work, in the locality, is usually performed under the direction of the business or by a specialist without supervision;
- the skill required in the particular occupation;
- whether the business supplies the instrumentalities, tools, and place of work;
- the length of time for which the worker is employed;
- the method of payment, whether by the time or by the project;
- whether the work is regularly performed by the business; and
- whether the parties believe they are creating a master and servant relationship.
What happens if there is joint employment?
There are significant implications for a finding of “joint- employment” status. If an entity is deemed to be a joint employer, it can be liable to the employee to the same extent as the primary employer. This means that a joint employer may be held liable for unpaid wages, discrimination, harassment, retaliation, and more.
Because of the fact specific nature of the inquiry and its significant implications, please contact one of our employer lawyers to discuss your specific circumstances.