What is a “joint employer” and why is it important under FLSA

Under the Fair Labor Standards Act, an employee may stand in an employment relationship with more than one entity. As a result of this potential multi-employer relationship, workers frequently seek expanding targets of liability. This concept is known as a joint employer relationship.

In In Re: Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, 2012 U.S. App. LEXIS 13229 (3d. Cir. June 28, 2012), the Third Circuit Court of Appeals announced a new test for determining whether a joint employer relationship exists under the Fair Labor Standards Act. Courts first must consider: (1) the alleged employer’s authority to hire and fire the relevant employees; (2) the alleged employer’s authority to promulgate work rules and assignments and to set the workers’ conditions of employment, including compensation, benefits, and work schedules, including the rate and method of payment; (3) the alleged employer’s involvement in day-to-day employee supervision, including employee discipline; and (4) the alleged employer’s actual control of employee records such as payroll, insurance, or taxes. The court stated that this is not an exhaustive list of the relevant considerations, and thus it cannot be “blindly applied.” Courts next must consider any other indicia of “significant control” over the employee (by the potential joint employer), which it held may be persuasive to a finding of joint employment when incorporated with the other factors.