Are You a Joint Employer?

Recently, the National labor Relations Board (NLRB) handed down a ruling which stated that companies can be held responsible and liable for labor violations which were committed by their independent contractors, temporary agencies or franchisees.  This so called “joint employer” decision could have broad repercussions for the business world.

This ruling is a sharp departure from previous decisions which stated that companies were only responsible for employees who were under their direct control. Without the power to set hours, wages or other job related responsibilities, the earlier rulings held that companies could not be held responsible for the labor practices of their independent contractors or franchisees.  The NLRB is now asserting that as joint employers, both companies share or co-determine those matters which govern the essential terms and conditions of employment.

Opponents of the ruling warn that it could have a very negative impact on businesses such as restaurants, retailers, manufacturers, and construction firms as well as hotels, cleaning services and staffing agencies.

Also, in a related opinion, the U.S. Fourth Circuit Court of Appeals recognized the “joint employer doctrine” for determining liability in Title VII employment discrimination lawsuits.  This means that multiple organizations may be considered employers at the same time for the purposes of hearing and ruling on discrimination lawsuits. The court has developed a “hybrid test” to determine if an organization is a joint employer for the purposes of liability in employment discrimination cases.

In its decision the court stated a new set of factors which courts must consider in determining whether a company can be considered as a joint employer and therefore liable for employment discrimination.

Those factors include the following:

1. Authority to hire and fire the individual;
2. Day to day supervision of the individual, including the disciplinary process;
3. Whether or not the supposed employer furnishes equipment used and place of work;
4. Possession of and responsibility over the individual’s employment records;
5. The length of time during which the individual has worked for the supposed employer;
6. Whether or not the supposed employer provides the individual with formal or informal training;
7. Whether the duties of the employee are akin to the regular duties of other employees;
8. Whether or not the employee is assigned only to one supposed employer;
9. 9Whether the individual and supposed employer intended to enter into an employment relationship.

In order to protect themselves and their organizations, employers should be aware of and in compliance with these and other regulations/decisions issued by various federal agencies and courts. If Paul Hilton, Human Resources Consulting, LLC can be of any assistance with these or other HR related issues, please do not hesitate to contact us.

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Paul Hilton is a certified Human Resources Consultant, located in Columbia, SC.
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