Joint employer
A joint employer is a business found to share legal responsibility for an employee’s wages, hours, or working conditions alongside another company.
The other company is most often the employee’s direct or nominal employer. The question comes up most often in staffing arrangements, franchise relationships, and businesses using contracted or subcontracted labor. Once a finding is made, both companies can be held responsible for the same wage and hour violation, such as unpaid overtime. A professional employer organizationPEO. A PEO (professional employer organization) is a company that co-employs your employees under a service agreement, while you keep direction and control of the work.Click to open the term or employer-of-record arrangement reallocates responsibility in its own documented way. Whether a joint employer finding applies on top of it is a separate question.
What do joint employer tests weigh?
Federal agencies, including the Department of Labor and the National Labor Relations Board, and courts apply their own tests. The standard can differ by the statute being enforced and the agency or court asked. If you share control over an employee with another company, get legal guidance on your specific arrangement. Document exactly which company controls which aspect of the work.
- Who controls hiring
- Who controls firing
- Who sets schedules
- Who sets pay rates
- Who supervises the work
- A contract’s label for the relationship
- Which company issued the paycheck
- A staffing arrangement alone
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.