Employers face many issues when it comes to the status and classification of their employees. One classification that can be detrimental to an employer is that of joint liability, which exists when one or more employees is employed by two or more employers, or in the eyes of the law, have joint control over one employee. This causes the employers to be responsible both individually and jointly to the employee for any compliance issues under the Fair Labor Standards Act (“FLSA”). Most commonly, joint employment issues arise within the construction, agricultural, janitorial, warehouse and logistics industries, but can also occur within the staffing, hospitality and franchise industries.
Determining whether two entities share joint liability under the Fair Labor Standards Act (FLSA) just got more difficult due to the January 25, 2017 United States Court of Appeals for the Fourth Circuit decision for Salinas v. Commercial Interiors, Inc. This case has established a new test to determine whether employers will bear joint liability for violations under the FLSA, which include six factors to answer the question of joint liability. Ultimately, the question trying to be answered with the implementation of these factors is whether two or more persons or entities are not completely disassociated with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine the essential terms and conditions of the worker’s employment. The six factors to help answer this question include:
- Do the employers jointly control or supervise the employee?
- Do the employers have joint authority to hire or fire the employee or modify the terms or conditions of the employee’s employment status?
- What is the degree of permanency and duration of the relationship between the two employers?
- Is one of the employers under the control of the other employer through shared management or an ownership interest?
- Is the work performed by the employee completed on a premises owned or controlled by one of the employers?
- Do the employers share the responsibilities carried out by an employer – including payroll, workers’ compensation insurance, payment of payroll taxes and providing the facilities and materials necessary for employees to complete their work?
Given the above factors, employees – general contractors in particular – should be wary of their interactions with employees from other companies. If there is too much direction and control of that employee, joint employer liability might arise, in which both employers would be jointly and severally liable for any violation of the FLSA. For strategies to avoid joint employer liability, employers should contact their Maryland employment law attorney for guidance.