If a non-exempt employee works part time for two separate, but related, employers in the same workweek, such that the employee works 20 hours per week in one company and 25 hours per week in the other company, is the employee legally entitled to overtime pay because he is working more than 40 hours per week? It’s very possible he is.
Here’s why: It’s the U.S. Department of Labor’s position that in order for two employers to disregard all work performed by an employee for another employer and avoid any overtime pay obligations in the scenario above, the employers must be “acting entirely independently of each other and [be] completely disassociated with respect to the employment of a particular employee . . . .” 29 C.F.R. § 791.2(a).
While certainly not an all-inclusive list, some examples of what it means when employment by one employer is not completely disassociated from employment by another employer include situations where:
- There is an arrangement between the employers to share the employee’s services (for example, to interchange employees);
- One employer is acting, either directly or indirectly, in the interest of the other employer in relation to the employee; and/or
- The employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.
29 C.F.R. § 791.2(b). In fact, the U.S. Department of Labor is of the view that in each of the above examples, a joint employment relationship exists. In those cases, overtime pay would be owed to the employee in the hypothetical above for 5 hours of work.
These joint employment relationships are most common among businesses with multiple locations, such as retail stores/boutiques, bars/restaurants, and fitness studios. If you happen to operate a business that fits this profile, I urge you to take a closer look at your business’s pay practices.
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It’s important to note that “joint employer status” is a complicated topic and the factors outlined above are not appropriate for all legal issues. For example, the issue of subcontractors as joint employers in an outsourced employment relationship typically involve another set of factors under the wage-and-hour laws.
Nor are the factors outlined above appropriate under all laws. The National Labor Relations Act, for example, is the federal law that encourages collective bargaining, and it has its own test for determining joint employer status. The laws also differ from state to state.