New Jersey lawyer focusing on special education law and employment law


Joint Employer and Overtime Pay

The concept of “joint employer status” is elusive to employers and employees alike.

The Fair Labor Standards Act provide that

all joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the act, including the overtime provisions, with respect to the entire employment for the particular workweek. 29 C.F.R. § 791.2.

Non-exempt employees who work more than 40 hours per week are entitled to overtime premium. Overtime pay is calculated by multiplying the number of hours worked beyond forty by one and one-half the regular hourly rate.

Sometimes, there is a situation where an employee appears to be working for two separate employers, or two separate businesses. In such instances, the employee would not be entitled to overtime premium if the employee is in fact working for two separate employers or companies that have no connection with each other.

When an employee performs work that simultaneously benefits two or more employers, joint employer status may be considered. Attorneys and Wage and Hour Investigators, of course, need additional information to make a persuasive argument one way or the other.

Consider a simplistic example: Suppose there are two companies, a parent company and a subsidiary. These companies are related because one company owns and/or controls the other company. If there is a paper trail showing that both the parent company and the subsidiary are jointly instructing, disciplining, and controlling employees, it is possible that the parent company and subsidiary are joint employers because both companies are exerting significant control over the employee.

Recently the U.S. Court of Appeals for the Third Circuit established factors to determine “joint employer status”:

1. Do both employers have the ability to hire and fire the relevant employees?

2. Do both employers have the ability to issue and implement work rules/assignments?

3. Do both employers have the ability to establish conditions of employment for the workers?

4. Are both employers involved in the day-to-day supervision of workers?

5. Do both employers have actual control of employee records, such as payroll, insurance, or taxes?

The Third Circuit court called this the “Enterprise” test. See In re: Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation (June 28, 2012).

It should be noted that above numbered factors may not be appropriate for all cases involving joint employer status. For example, where the plaintiffs are independent contractors, other factors may need to be considered.

Joint employer status is a complicated topic. It is also a fact-sensitive issue. An allegation regarding joint employer status must be evaluated on a case-by-case basis. In many cases, there will be a paper trail, and these documents will help determine whether or not an employee is entitled to overtime pay.

For many businesses — particularly medium-sized and large-sized companies — understanding joint employer status is very important. In recent years, many large companies have been sued for overtime pay under the theory of joint employer status. Such companies have included Walmart, Target, Safeway, Time Warner, FedEx, and DHL.

Employers who fail to take the time to understand joint employer status risk violating wage and hour laws. Additionally, they may face significant back-wage payments, liquidated damages, and, where appropriate, attorney’s fees and costs.

New Jersey employees who believe that they are entitled to overtime premium have the right to file a complaint with the U.S. Department of Labor or the New Jersey Department of Labor. Alternatively, employees may file a private lawsuit against the companies for overtime pay, liquidated damages, and attorney’s fees and costs.


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