As I have reported on before, the United States Department of Labor is cracking down on companies who improperly try to avoid classifying a worker as an employee. One of the new measures it is taking is considering whether a worker might be considered a joint employee of two different businesses. It has therefore issued new guidance on joint employers.
Employees have rights under federal and state labor laws to many benefits that are not enjoyed by independent contractors, such as payment into the Social Security system, unemployment and workers’ compensation coverage, and inclusion in employer benefit programs, such as health insurance and leave time.
The DOL’s Wage and Hour Division Fact Sheet #35 explains that “
In other words, you can be considered an employee of more than one company. If you are, both companies have to comply with federal and state laws that relate to your job.
Examples of situations in which joint employment should be considered include agriculture, staffing agencies, and intermediary employment situations, such as the construction and hospitality industries. In these areas, it is more likely that either the employers are intermingled or that the employee is economically dependent on more than one company.
This is an important issue for employees. The DOL is aggressively pursuing potential joint employer situations, trying to determine who truly employs our nation’s workers. Employers cannot be allowed to cut corners by using staffing agencies or independent contractors, at employee expense.
The DOL explains that there are two types of joint employment: vertical and horizontal. Vertical joint employment usually involves a staffing agency or subcontractor. In vertical joint employment, the worker is economically dependent on a business other than the one listed on his or her W-2. While part of the analysis deals with which business controls the employee’s work, the heart of vertical joint employment is which business economically supports the worker.
Horizontal joint employment usually applies to businesses who are related to one another. For example, the companies may share managers, supervisory control, business locations, or clients.
If you are involved in either of these situations, you should contact us today to speak with an experienced labor lawyer in Sacramento who can help you sort out whether you may be entitled to additional pay or benefits under federal or California law.
Sacramento, CA 95821