Dept. of Labor Wants More Companies Classified as Joint Employers

The average person’s work experience in America has changed dramatically over the past half-century. It used to be the case that a worker just out of college could get hired by a company and stay with that organization for most or all of his career. But for better and worse, these kinds of career-long employment opportunities rarely exist anymore.

Instead, the average American worker can expect to have numerous jobs throughout his career. And it is increasingly becoming the norm for workers to work for more than one employer at a time – either in the form of a second job or through a contracting scenario. This relationship can be beneficial for workers, but it can also be exploitative. The U.S. Department of Labor recently announced that it wants to crack down on companies taking the latter approach.

In Silicon Valley and elsewhere, companies are increasingly relying on outsourcing, subcontracting and temporary employment (such as through a staffing agency). It is expensive to hire and train a large, full-time staff – especially if your company’s work needs fluctuate over time. That’s one reason why these alternative employment relationships are attractive.

But the DOL believes that many companies are misusing these alternatives to:

• Avoid paying overtime to workers
• Avoid legal liability for employment law and workplace safety violations
• Avoid the costs that come with hiring regular employees, including certain taxes and benefits

In an effort to crack down on this behavior, the DOL has issued guidance to help businesses more accurately classify certain employment relationships. Agency officials say that in many of the cases they have seen, companies and staffing agencies should have been considered joint employers, which would increase a company’s liability for any wrongdoing.

It is important to note that the new employment landscape can be confusing, even if companies have the best intentions. That being said, honest mistakes could nonetheless land your business in trouble with the Department of Labor or other regulatory agencies. In order to ensure that your business is in full compliance with employment and wage laws, you may want to seek the help of an experienced business law attorney.