Caution, Joint Employers:  The DOL is Looking for YOU!

by Marti Cardi, Esq. - Senior Compliance Consultant and Legal Counsel

January 26, 2016


SignEmployers, it’s time to take a broad look at your relationships with your workers.  Joint employer compliance with the FMLA is on the DOL’s radar, and the agency is finding many businesses short on adherence to the applicable regulations.  The DOL asserts that today’s varied worker arrangements are causing a “fissured” workplace and promises to “continue to identify where joint employment applies and to hold all employers responsible.”

To this end, on January 20th, the U.S. Department of Labor (DOL) released a new Administrator’s Interpretation 2016-1 (AI) on the responsibilities and obligations of joint employers.  While the AI addresses the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act, the DOL concurrently issued a new Fact Sheet #28N, which focuses on joint employer responsibilities under the FMLA.

What are “joint employers”?  The DOL’s helpful definition is that “joint employment exists when a person is employed by two or more employers such that the employers are responsible, both individually and jointly, for compliance with the FMLA.”  In actuality, the existence of joint employment is a fact-specific determination.  Relevant considerations include whether the two (or more) employers have shared owners, management, administrative or operational functions, customers, and control of the employees.  Joint employment relationships may exist in a variety of contexts, including direct sharing of employees and using third-party management companies, staffing agencies, or labor providers.  The AI provides more detail and many examples of joint employer situations.

Primary and secondary employers.  In most joint employment situations, one employer will be the primary employer and the other(s) will be the secondary employer.  DOL’s FMLA Fact Sheet #28N instructs that the determination depends (again) on the particular facts, including:

  • who has authority to hire and fire, and to place or assign work to the employee;
  • who decides how, when, and the amount that the employee is paid; and
  • who provides the employee’s leave or other employment benefits.

Primary and secondary employers’ obligations under the FMLA. The primary and secondary joint employers have differing FMLA obligations.  The primary employer is responsible for FMLA compliance from soup to nuts: providing required notices to employees, providing FMLA leave, maintaining group health insurance benefits during leave, restoring the employee to the same or equivalent position following leave, and keeping the required FMLA records.

The secondary employer has more limited FMLA responsibilities.  In certain circumstances the secondary employer may be obligated to restore the employee to the same or equivalent job after FMLA leave, such as when it continues to use the services of a placement agency and the agency again places the employee with that client employer.  The secondary employer must keep basic payroll and identifying employee data with respect to any jointly-employed workers.  And of course, the secondary employer is also responsible for compliance with all the provisions of the FMLA for its regular, permanent workforce.

This handy table outlines the employers’ respective FMLA responsibilities, compliments of the DOL in Fact Sheet #28N.  (Note that the table assumes both employers are FMLA-covered and that the employee is eligible for FMLA leave.)

FMLA Responsibilities of Joint EmployersPrimary EmployerSecondary Employer
Count jointly-employed employees for coverage and eligibility determinations (Fact Sheet #28)Yes.Yes.
For employee-eligibility determination, use its worksite for the eligibility test (50 employees within 75-miles of the worksite) (Fact Sheet #28)Yes, unless the employee has physically worked at the secondary employer’s facility for at least one year.No, unless the employee has physically worked at the secondary employer’s facility for at least one year.
Provide FMLA notices to the jointly-employed employee (Fact Sheet #28D)Yes.No; however the secondary employer must provide FMLA notices to its own employees.
Provide FMLA leave to the jointly-employed employee (Fact Sheet #28F)Yes.No; however the secondary employer must provide FMLA leave to its own eligible employees.
Maintain benefits for the jointly-employed employee (Fact Sheet #28A)Yes.No; however the secondary employer must maintain benefits for its own employees who take FMLA leave.
Restore the jointly-employed employee to work (Fact Sheet #28A)Yes.No, unless the secondary employer is continuing to use the placement agency and the agency places the employee with that secondary employer.
Not retaliate, discriminate or interfere (Fact Sheet #28A and Fact Sheet #77B)Yes.Yes.
Keep recordsYes, the primary employer keeps all required records.Yes, the secondary employer keeps payroll data and identifying employee information.

PINGPings for employers.   With heightened scrutiny from the DOL and a promise to “hold all employers responsible” for employment law compliance, it behooves employers to look closely at their worker relationships.

If your company has any alternative or contingent work arrangements, shares employees with another company (e.g., an affiliate), or engages any workers through a temp, staffing, or labor agency, consider the following actions:

  • Conduct an analysis of any worker arrangements that are not straight-up employer-employee relationships. Use  Administrator’s Interpretation 2016-1 and DOL Fact Sheets #28N and #35 as guides.
  • Inquire about the FMLA practices of any staffing or labor agency you use to ensure it is fulfilling its FMLA obligations.
  • Coordinate FMLA compliance with any other employer with which you share workers.
  • Remember that the joint employer rules have implications far beyond FMLA obligations – most notably, the wage and hour rules established by the Fair Labor Standards Act.
  • Be prepared to make changes if necessary. It might be tough, but better to clean up your practices voluntarily than to have the DOL order you to do it – after an expensive, disruptive, and time-consuming DOL investigation that might result in fines and damage awards to employees.