February 2016

Understanding the details of joint employment

It is generally not a concern—nor is it unusual—for school district employees to work for more than one employer. This practice may, in some cases, result in a joint employment relationship between the district and the other employer. Districts that are part of an educational co-op or outsource district functions should take note.
 
If a joint employment relationship exists, the district and the other employer are responsible for ensuring that employees are appropriately paid based on work performed for both employers. In the case of nonexempt employees, this would include paying for any overtime incurred when the hours for both employers are combined.
 
When a joint employment relationship exists, eligibility for Family and Medical Leave would also be based on the total time worked for both employers.
 
On Jan. 20, 2016, the U.S. Department of Labor (DOL) published an Administrator’s Interpretation (2016-1) on joint employment under the FLSA. The Administrator’s Interpretation outlines two types of joint employment: horizontal and vertical. Some cases may meet the definition of both horizontal and vertical joint employment.

Horizontal joint employment

With horizontal joint employment, the employee performs different work or works separate hours for more than one employer. Although the employers may be technically separate, they have economic ties to each other. The employers may have an arrangement to share the employee’s services, one employer may act directly or indirectly in the interest of the other in relation to the employee, or one employer controls or is controlled by the other employer. Factors that may be used to determine horizontal joint employment include some the following:
  • Joint ownership of the employers or overlapping officers, directors, or managers
  • Shared control over operations such as hiring, firing, payroll, and overhead costs
  • A single administrative operation for both employers
  • Employers treat employees as a pool of workers
  • Employers have an agreement
An example of horizontal joint employment might be a special education co-op. One district acts as the fiscal agent for the co-op and handles the administrative operations. The employees are treated as a pool of workers for all districts in the co-op. Therefore, the district acting as the fiscal agent and the district where the employee performs the work are joint employers.

Vertical joint employment

A vertical joint employment relationship may exist when an intermediary employer (e.g., temporary agency or third-party contractor) provides workers or performs employer functions for a school district as part of an agreement. The DOL outlines seven factors that can be used as guides to determine if the employee of the intermediary company is economically dependent on the school district, and, therefore, jointly employed by the district.
  • Directing the work performed—The district’s control can be either direct or indirect, such as giving direction through the intermediary employer
  • Controlling employment conditions—The district has the power to hire, fire, determine pay, or change employment conditions
  • Considering the duration of the relationship—An indefinite, full-time, or long-term relationship with the worker is a sign of economic dependence on the district
  • Determining the nature of the work—The worker performs repetitive or relatively unskilled work that requires little or no training
  • Examining the work’s importance—the work is integral to the district’s business such as a worker who provides special education support services
  • Seeing where the work is performed—the work is performed on the premises owned or controlled by the employer
  • Performing administrative functions—the extent to which the district provides administrative support for the employee, such as providing workers’ compensation insurance, facilities, safety equipment, or the tools and materials required to perform the work
Examples of vertical joint employment in a school district might include outsourced district functions such as transportation, food service, custodial services as well as office workers, teachers, or administrators hired through an intermediary agency.
 
The DOL Website has additional information on joint employment.