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Joint employment (US Law)


Joint employment, or co-employment, is the sharing of control and supervision of an employee's activity among two or more business entities. Joint employment may occur by design, as when one firm engages a Professional Employer Organization (PEO) to handle payroll and benefits administration while retaining overall direction of the employee's work. If the employees of its client hardly handle these administrations, a PEO will not sign a joint employment contract with them. A PEO would only become a joint employer with the client employer when a PEO has direct control of the client’s staff. They can decide whether or not they would like to be a joint employer with the client firms depending on all the facts based on the different situation. Outsourcing some of the HR responsibilities allows for ultimately better benefits, because the Employee Leasing Company can pool their clients. Joint employment may also arise unintentionally by misclassifying employees as independent contractors.

At present, no single definition of joint employment exists. Instead, various employment laws define situations in which joint employment may occur with respect to that law.

An example is the Family and Medical Leave Act in the United States. This Act defines joint employment in determining which business entity has the legal responsibility to provide an equivalent job for an employee returning from family or medical leave.

Under the Fair Labor Standard Act of 1938, two or more employers can employ an individual employee at the same time, as the Act does not prevent an employee from having more than one employment relationship at the same time. If all the facts show that the two employers are not acting independently and yet the employee is jointly employed, all the work the employee does during the agreed period is considered as one employment for purposes of the Act. Therefore, both employers are responsible, individually and jointly, to comply with all provisions of the Act (such as overtime) with respect to the entire employment for the particular workweek. In discharging the joint obligation each employer may, of course, take credit toward minimum wage and overtime requirements for all payments made to the employee by the other joint employer or employers.


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