Skip to Content
Logo
Menu
  • About Our Firm
  • Practice Areas
  • Our People
  • Learning Library
  • Corporate Transparency Act
  • Contact
  • Make A Payment

A Simpler Joint Employment Doctrine

A Simpler Joint Employment Doctrine

January 20, 2020

The legal doctrine of joint employment bedevils many employers. Reduced to its essence, joint employment means that an employee can look to two different employers for liability purposes if that employee’s legal rights are violated. For example, if a manufacturing company hires a staffing agency to supply it with workers for its third shift, that manufacturing company and the staffing agency may potentially both be held liable for wage and hour violations if the third shift employees are paid incorrectly.

Three years ago, we wrote about a six-part test that was used by the Fourth Circuit Court of Appeals to determine joint employment. On January 12, 2020, the Department of Labor announced a final rule updating its regulations regarding joint employment. The effective date of this new rule is March 16, 2020. The advantages of the new test are that it is only four parts and less cumbersome than other tests being used by the courts.

The New Four-Part Test for Joint Employment

The most common scenario where joint employer liability might arise is where an employee performs work for the employer that simultaneously benefits another individual or entity. Under this scenario, an entity is a joint employer if it:

  • hires or fires the employee;
  • supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • determines the employee’s rate of pay and method of payment; and
  • maintains the employee’s employment records

The new rule says explicitly that maintenance of an employee’s employment records alone, will not lead to a finding of joint employer status.

These Arrangements Do Not Create Joint Employment

The final rule also says that certain business models do not automatically confer joint employment status. For example, absent more, a franchisor is not a joint employer with its franchisees. Further, just because one company requires another company to conduct background checks on their employees, or engage in harassment training, does not create a joint employment relationship. Other contractual requirements such as requiring another company to maintain certain quality control standards does not create a joint employment relationship.

Perhaps most refreshing is the way the new regulation allows collaboration and economies of scale between businesses without creating joint employment. The following business relationships, absent more, do not create a joint employment relationship:

  • providing an employee with a copy of the potential joint employer’s employee handbook;
  • allowing another business to operate on a larger business’s premises (store within a store);
  • offering an association health insurance plan shared by various businesses;
  • jointly participating in an apprenticeship program

Employer Takeaways

Employers cannot be expected to memorize the four-part joint employment test. Moreover, the EEOC and the NLRB are likely to issue their own joint employment tests in the next year and many states have additional joint employment tests. Instead, most employers would be prudent to merely: 1) recognize that there is a doctrine of joint employment, and 2) understand that “control” of how an employee goes about performing their job is the most relevant factor in determining whether joint employment exists.

Related Attorneys

Clingen Callow & McLean, LLC
Lisle Office
2300 Cabot Drive, Suite 500
Lisle, Illinois, 60532
Phone 630.871.2600
Geneva Office
21 North 4th Street
Geneva, Illinois, 60134
Phone 630.938.4769
Fax 630.871.9869
General Inquires [email protected]
  • facebook
  • linkedin

Contact Us

©2025 Clingen Callow & McLean, LLC. All rights reserved.

Law Firm Web Design by NMC

Manage Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
View preferences
{title} {title} {title}