As businesses grow, they often look to outside vendors and contractors to help improve efficiency and reduce costs. These third-party vendors come in many different forms, janitorial services, human resources, accounting, etc. This creates a huge headache for determining liability in employment and labor disputes. To help delineate some of the ambiguity of liability in employment lawsuits, the US Department of Labor – Wage and Hour Division (WHD) has issued new guidance. While the following analysis focuses solely on FLSA violations, the same basic formula may be applied to violations of FMLA, ADA, and MSPA cases as well.
Horizontal vs. Vertical Joint Employment
It sounds like a chapter from a Statistics textbook, but the concept is relatively easy to understand.
Horizontal Joint Employment – When two or more employers separately employee an individual. There are separate organizational structures, and the employee works different hours for each. Meaning that each employer is afforded 40 hours before any overtime rate is due. This is often seen in franchise operations where a common brand has a shared management structure and may have employees work at two or more different locations. Each location would be responsible for paying the employee at each location.
Vertical Joint Employment – Where an employee works for an intermediary company or subcontractor to perform work, either exclusively or non-exclusively for another entity. An example of vertical joint employment would be a landscaping company that is contracted to perform services for a golf course. However, the golf course would not directly supervise the individual employee. An employee could work at several locations for the same landscaper company, but still, be afforded an overtime rate for more than 40 hours total for all locations.
Determining economic dependence and liability for Fair Labor & Standards Act (FLSA) cases.
As discussed in past blog posts, contracting and subcontracting employment relationships are often analyzed concerning if an employer has sole economic and supervisory influence over an individual employee. The same principles of determining independent contractor status for purposes of the FSLA can also be applied to determine the extent of vertical joint employment. Many factors, including economic dependence, supervision, and education/skill level, needed to perform the work are all factors when considering an FLSA suit against joint employers.
The obscurity and continuously evolving nature of modern business organizations will continue to challenge the strategy and procedures of Employment & Labor Law. If you are pursuing a legal claim against an employer and believe that you were jointly employed by two or more employers, you must seek legal counsel of an attorney who specializes in Employment & Labor Law. The Law Firm of Massey and Duffy, PLLC, has represented hundreds of clients in labor disputes and has the experience and background to ensure that your case is handled correctly and aggressively. Call our office at (352) 505-8900 today to schedule a FREE CONSULTATION.