Joint Employment Trouble – You Could be Next | DCR Workforce Blog

Joint Employment Trouble – You Could be Next

Joint Employment Trouble – You Could be NextIn what’s being viewed as a major victory for workers’ rights, the U.S. Department of Labor’s Wage and Hour Division (WHD) found DirecTV, a staffing client of Advanced Information Systems, in violation of the Fair Labor Standards Act (FLSA) and its minimum wage, overtime and record-keeping provisions. DirecTV was asked to pay $395,000 in back wages and damages to 147 employees who were contingent workers hired as installers through Advanced Information Systems.

DirecTV claimed to have no liability as an employer of the installers, but was held responsible for the following FLSA violations in its dealings with the installers:

  • DirecTV and Advance Information Systems paid employees on a piece-rate basis, which resulted in their hourly rates falling below the federal minimum wage.
  • Installers weren’t paid for all hours worked. They also weren’t paid an overtime premium on their regular rates for the hours in excess of 40 per week.
  • The installers also weren’t paid for time spent on unsuccessful installations, travel time or for time in the office.
  • Installers weren’t reimbursed travel expenses.

The WHD established that DirecTV’s claim that there was no employment relationship with the installers was unacceptable and considered as an attempt by DirecTV to avoid liability for the way the installers were treated. The department noted that the installers had all conditions of employment specified by DirecTV, worked only on their installations, drove their vans and wore their clothing. These and other facts establish DirecTV as an employer of the installers under the FLSA, thus holding it responsible for every violation of the FLSA that the installers suffered.

DirecTV was ordered to comply with the FLSA’s minimum wage, overtime and record-keeping provisions and to ensure that its contractors comply with the FLSA; require specific terms on travel reimbursements; give all of its Washington installers a copy of the court’s decision; told to monitor all its installers’ employment conditions across the nation; and ordered to reimburse their travel expenses.

WHD clarifies joint employment under the FLSA and MSPA

Many businesses are changing their staffing models by sharing employees or using third-party management companies, independent contractors, staffing agencies or other labor providers. Industries such as construction, agriculture, janitorial services, distribution and logistics, staffing, healthcare and hospitality as well as many other industries have completely changed the concept of traditional employment relationships. When a person is employed by two or more employers, the employers can be held responsible, both individually and jointly, for non-compliance with a statute protecting the worker’s rights. A worker may be considered jointly employed by two or more employers who are then both responsible, simultaneously, for compliance.

The Administrator issued interpretations concerning joint employment under the FLSA and Migrant and Seasonal Agricultural Worker Protection Act (both of which define employment in an identical way), issued by the Department of Labor on January 20, 2016 as follows:

  • The FLSA finds joint employment when workers have an employment relationship with one employer such as a staffing agency, but the economic realities cannot demonstrate their economic dependence on — and thus employment by — another entity, read staffing buyer, involved in the work.
  • Covered, non-exempt employees must be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time-and-one-half their regular rates, including commissions, bonuses and incentive pay for hours worked beyond 40 per week.
  • As the FLSA provides that employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages, employers also must maintain accurate time and payroll records.
  • Staffing buyers need to include a written provision in all contracts with temporary staffing agencies requiring compliance with the minimum wage, overtime and recordkeeping provisions of the FLSA.
  • Staffing buyers review their temporary staffing agency payroll records at least four times a year to ensure payment in compliance with the FLSA.

Companies can’t employ temporary workers, aiming to deprive them of fair and legal wages. Employers who contract with outside companies for temporary help have an equal obligation to ensure that these workers are paid in compliance with the law. Failure to do so would invite the wrath, not only of the FLSA, but also the National Labor Relations Board (NLRB) and many other regulatory authorities.

Often a vendor management system (VMS) can help you avoid these types of tricky situations. For instance, Smart Track has built-in capabilities to flag and warn employers of impending issues. Have you invested in a VMS?

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.